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The US dollar surged on Monday with uneven gains against most major rival currencies.
The EUR/USD pair lost the 0.9900 threshold and trades near a daily low of 0.9872, while GBP/USD trades around 1.1470. Commodity-linked currencies recovered some ground ahead of the close as Wall Street trimmed most of its early losses. AUD/USD trades just below 0.6400, while USD/CAD is down to 1.3620.
The USD/JPY pair advanced and is now trading around 148.60, while USD/CHF hovers around parity.
Gold trades at its lowest in a week, now hovering around $1,635, while crude oil prices edged lower and WTI changes hands at $86.40 a barrel. Binance Coin price pumps on improving fundamentals – forecasting a bullish move to $380
China’s yuan retreated following data released on Monday showed China’s factory activity unexpectedly fell in October, weighed down by softening global demand and strict domestic COVID-19 curbs.
Economic Data
Dallas Fed Manufacturing Index for October came below market expectations. The headline General Business Activity Index of the Federal Reserve Bank of Dallas’ Texas Manufacturing Survey declined to -19.4 in October versus the previous reading -17.2 in September.
The fresh figure is weaker than the market expectation of -15. Further details of the survey revealed that the Manufacturing Output Index fell to 6 from 9.3, the Employment Index improved to 17.1 from 15 and the Company Outlook Index edged higher to -9.1 from -10.7.
At the beginning of the day, Australia reported that TD Securities Inflation was up by more than anticipated in October, now at 5.2% YoY from 5% in the previous month. Later in the day, the Eurozone published the preliminary estimate of the October Consumer Price Index, up at an annualized pace of 10.7%, a new record.
Tepid Chinese data released at the beginning of the day, alongside continued signs that global inflation is out of control, fueling risk-averse trading.
China’s official manufacturing PMI recorded a contraction in activity (49.2) in October, down from the very modest expansion (50.1) indicated in September. The non-manufacturing PMI index also registered a contraction, falling to 48.7 in October, down from 50.6 in September a month ago.
Other Developments
The US Fed will announce its decision on Wednesday, and market players anticipate a 75 bps hike and hint it will start slowing the pace of rate hikes in December. Finally, the Bank of England will have a Super Thursday, with the latest political turmoil in the United Kingdom generating uncertainty on what Governor Andrew Bailey and co can do this time. Finally on Friday, the US will publish the October Nonfarm Payrolls report.
Central banks adopted aggressive quantitative tightening to bring inflation down, but so far, there are no signs that price pressures have begun receding. The Bank of Canada and the Reserve Bank of Australia have already started easing the pace of tightening.
The Reserve Bank of Australia will open the central banks’ calendar on Tuesday and is expected to announce a modest 25 bps rate hike despite inflation jumping to a two-decade high in the third quarter of the year.
In the UK, Prime Minister Rishi Sunak and Chancellor Jeremy Hunt had a meeting and news indicated that “it is unavoidable that all British citizens would pay more taxes”.
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