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By xemarketanalysis September 11, 2017 3:07 pm
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    XE Market Analysis: Dollar Recovers as Irma Loses Strength


    • Market risk sentiment improves after no new missile launches from North Korea.
    • ECB board member, Benoit Coeure, warned that persistent Euro gains might weigh on inflation.
    • Britain's Brexit minister David Davis warns MP's over voting against great repeal bill.
    • Canadian housing starts unexpectedly rise in August.


    The US Dollar is recovering today, after having its worst week in months last week as market skepticism over US rate hikes increased, and Hurricane Irma headed towards Florida after devastating the Caribbean islands. Irma battered Florida state but caused less damage than originally feared and has been downgraded to a tropical storm now. 


    The US Dollar is broadly higher after Hurricane Irma's impact turned out to be less than feared (see highlight). The trend, however, remains lower, with still very limited details on Trump's tax plan, and low expectations that it will pass either house. This week's key data is inflation on Thursday, followed by retail sales and industrial production on Friday.


    The Pound is marginally higher across the board, ahead of a big week in terms of data that has implications for the Bank of England meeting on Thursday. Inflation is forecast at 1.8% for August, up from 1.6% in July and keeping the pressure on the BoE to tackle above target CPI. Unemployment data on Wednesday is expected to see wage growth firm and the rate hold at its lowest since 1975.


    The Euro hit its day's lows after ECB board member, Benoit Coeure, said improved Eurozone growth that was becoming more reliant on domestic demand could offset some of the negative effects of the Euro's strength, but a persistent exchange rate shock could drag down inflation. The clear upwards trend in EUR/USD remains in tact and further gains in the weeks ahead appear more likely than not.


    The Canadian Dollar is down marginally on the day after hitting a fresh 2-year high on Friday following the strong jobs report. The Loonie has risen 11% versus the Dollar as US rate hike expectations have slumped, while Canadian expectations have surged alongside economic growth. This continues to support further gains in the Canadian Dollar.


    The Aussie Dollar has slipped back from its recent peak versus the US Dollar as it rebounds on relief that North Korea refrained from launching new missiles over the weekend. The key highlights this week will be employment data on Thursday, with jobs growth having accelerated markedly this year to reach an annual 2%, supporting household incomes and spending at a time of record-low wage rises.


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