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Daily FX Update – 23rd November 2017

The FOMC minutes signalled a December rate hike but the Dollar slid further as the lower inflation grumble became a little louder suggesting that December would likely be the last raise in a while.

All other things being equal, I think the Dollar sell off is a little overdone with yesterday’s durable goods miss adding fuel to the fire. The lack of inflation is a factor that has already been taken in to consideration and yesterday’s minutes release simply reiterated it. The US is ultimately doing well retrospectively speaking and for me, we are seeing a little squeeze.

The key takeaway from UK budget was the downgrade to UK growth forecasts but GBP was largely unchanged although this paints a worrying picture moving forward with the uncertainty surrounding Brexit especially when you consider these are the worst projections since the financial crisis and other trading partners are revising growth forecasts higher. GBP bulls beware.

Thanksgiving in the US turns the focus to the UK today with poignantly timed GDP numbers following the downgraded growth projections yesterday. We also have the release of the ECB minutes this morning. The single currency has been creeping higher in the background of a little Dollar weakness so this together with services and manufacturing PMIs could set the short term tone for it.

Have a good day.

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