The Greenback’s Decline: A Closer Look
The US Dollar Index (DXY) has experienced a third consecutive week of losses, with the decline intensifying following the Federal Reserve’s significant rate cut on September 18. Investors are closely monitoring the possibility of additional rate cuts later in the year, while also considering the likelihood of a soft landing for the US economy. This has led to a preference for risk-associated assets, further impacting the currency’s weakness.
Key Events in the US Docket
- Advanced S&P Global Manufacturing and Services PMIs on September 23
- FHFA’s House Price Index on September 24
- Conference Board’s Consumer Confidence and API’s report on US crude oil inventories
- Weekly Mortgage Applications, New Home Sales, and EIA’s report on US crude oil stockpiles on September 25
- Durable Goods Orders, final revision of Q2 GDP Growth Rate, Pending Home Sales, and weekly Initial Jobless Claims on September 26
- PCE, Personal Income, Personal Spending, advanced Goods Trade Balance, and final Michigan Consumer Sentiment on September 27
EUR/USD Performance
The EUR/USD pair has resumed its climb, surpassing the 1.1100 mark as the US Dollar continues to weaken. Key upcoming events include:
- Flash HCOB Manufacturing and Services PMIs in Germany and the EMU on September 23
- Germany’s IFO Business Climate on September 24
- GfK’s Consumer Confidence in Germany, ECB’s M3 Money Supply on September 26
- German labor market report on September 27
GBP/USD Standout Performance
GBP/USD has outperformed its risk peers, reaching levels above 1.3300 for the first time since February 2022. Highlights include:
- S&P Global Manufacturing and Services PMIs on September 23
- Car Production figures on September 26
- CBI Distributive Trades on September 27
USD/JPY Rebound
The decline in USD/JPY has found support around the 139.50 zone, driven by risk-on sentiment and dovishness from the BoJ. Noteworthy events include:
- Preliminary Jibun Bank Manufacturing and Services PMIs on September 24
- BoJ Minutes and Foreign Bond Investment figures on September 25
- Tokyo CPI on September 26
- Final Coincident Index and Leading Economic Index on September 27
AUD/USD Momentum
AUD/USD has broken through the 0.6800 barrier and advanced to late 2023 levels due to increased risk appetite and a weaker US Dollar. Key upcoming events include:
- Flash Judo Bank Manufacturing and Services PMIs on September 23
- RBA discussions on September 24
- RBA’s Monthly CPI Indicator on September 25
- RBA’s Financial Stability Review on September 27
Anticipating Economic Perspectives: Voices on the Horizon
- Insights from the Fed’s Bostic, Goolsbee, and Kashkari on September 23
- Expectations from the ECB’s Cipollone and Elderson
- Updates from the Fed’s Bowman and the ECB’s Nagel on September 24
- Discussions with the Fed’s Kugler, the ECB’s McCaul, and the BoE’s Greene on September 25
- Engagements with the ECB’s McCaul, De Guindos, Buch, Elderson, Schnabel, Lagarde, and more on September 26
- Further discussions with the Fed’s Bowman on September 27, along with the ECB’s Cipollone, Nagel, and Lane
Central Banks: Upcoming Meetings
- RBA and Hungarian central bank (MNB) meeting on September 24
- Riksbank rate decision on September 25
- SNB and Banxico meetings on September 26
Analysis
The recent trends in currency performance and central bank actions provide valuable insights for investors and individuals alike. Understanding these developments can help individuals make informed decisions about their financial investments and the overall economic landscape. By staying informed about global economic events, individuals can better prepare for potential shifts in the market and take advantage of opportunities to secure their financial future.