US dollar losing momentum ahead of the release of the US PCE Price Index report.
The US Dollar Index (DXY) fell on Thursday, extending the slight losses experienced in the previous four days. Nonetheless, the US Dollar (USD) remains near three-month highs and poised to have its best monthly performance in more than two years.
The US macroeconomic data continues to support the narrative of a strong economy in a period of global downturn, giving the USD A competitive advantage over the rest of the main currencies.
The ADP employment data surpassed expectations on Wednesday, relieving concerns about a downturn in the labor market and raising investors’ hopes for Friday’s Nonfarm Payrolls (NFP) report.
Daily Market movers: The US dollar extends losses following a pick-up in Eurozone inflation.
The Eurozone Consumer Prices Index (CPI) statistics for October showed higher-than-expected inflationary pressures. This, together with the good surprise in Q3 GDP, has reduced expectations of dramatic interest-rate reduction by the ECB, giving some support for the Euro (EUR).
USD pulled down by a relatively hawkish BoJ Governor, Kazuo Ueda, as well as increasing inflationary pressures in Europe.
The Bank of Japan (BoJ) left interest rates unchanged on Thursday, although Governor Kazuo Ueda hint at additional monetary normalization if circumstances satisfied. This provided oxygen to a bruised Japanese. The Japanese yen (JPY) puts pressure on the US dollar.
The US ADP Employment revealed a 233K increase in private-sector payrolls in October, well exceeding the predicted 115K. September’s reading was updated to 159K from 143K.
The third-quarter US GDP statistics, also announced on Wednesday, fell short of expectations with a 2.8% annualized growth rate. The statistics fell short of the predicted 3%, but they remain consistent with a strong economy.
Wednesday’s statistics strengthened the case for gradual easing by the Federal Reserve (Fed), but it did not contribute anything new that would fundamentally alter the outlook for interest rate policy. The early beneficial impact on the Dollar dissipated quickly.
The Federal Reserve’s preferred inflation indicator, the Personal Consumption Expenditures (PCE) Price Index, redicted to The Japanese yen (JPY) puts pressure on the US dollar.
