US dollar backs off three-month high ahead of growth data
The US dollar fell in European trade on Wednesday against a basket of major rivals, extending losses for the third straight session and moving away from three-month highs on active profit-taking, while US 10-year treasury yields dropped.
It comes after weak US jobs opportunities data, which boosted the odds of a 0.25% Fed rate cut in November to 100%.
Now investors await a batch of US data later today on US GDP growth and private sector employment.
The Index
The dollar index fell 0.3% to 103.98, with a session-high at 104.32.
The index lost 0.1% on Tuesday, the second loss in a row away from a three-month high at 104.64.
US Yields
US 10-year treasury yields fell 0.95% on Wednesday, extending losses for the second day and backing off 3-⅕ month highs at 4.337%.
The developments came after US data showed job opportunities fell in September, in turn reducing the pressure on Fed policymakers.
US Rates
According to the Fedwatch tool, the odds of a 0.25% Federal Reserve interest rate cut in November rose to a full 100%.
Later, data on the US private sector is expected to show the addition of 110 thousand new jobs in October, down from 143 thousand.
US GDP growth is expected at 3% in the third quarter, same as the second quarter.
Gold about to trade above $2800 for first time ever
Gold prices rose in European trade on Wednesday on track for the second profit in a row, hitting a record high and about to trade above $2800 for the first time ever as investors rush to the safe haven before the US presidential elections next week.
The gains came as the dollar and US treasury yields lost ground before important US growth and labor data this week.
The data will provide fresh pricing for future Federal Reserve interest rate cuts this year.
Prices
Gold prices rose 0.55% to $2789 an ounce, a record high, with a session-low at $2770.
On Tuesday, gold rose 1.2% today, the third profit in four days, marking a record high.
The Dollar
The dollar index fell 0.25% on Wednesday on track for the second loss in a row away from a three-month high at 104.64 amid active profit-taking.
US Yields
US 10-year treasury yields fell 0.95% today away from a 3-⅕ month high at 4.337%, in turn boosting non-yielding assets.
The developments came after US data showed job opportunities fell in September, in turn reducing the pressure on Fed policymakers.
US Rates
According to the Fedwatch tool, the odds of a 0.25% Federal Reserve interest rate cut in November rose to a full 100%.
SPDR
Gold holdings at the SPDR Gold Trust fell 1.72 tons yesterday to a total of 889.78 tons.
Euro hits one-week high ahead of German inflation data
Euro rose in European trade on Wednesday on track for the third profit in a row against the US dollar, hitting a week high after data showed Spanish inflation rose past estimates in October, renewing the pressure on the European Central Bank.
The odds of a 0.25% ECB interest rate cut in December dipped, with investors now waiting for official German inflation data later today, then inflation data for the whole eurozone tomorrow.
The Price
The EUR/USD pair rose 0.25% today to $1.0844, the highest in a week, with a session-low at $1.0812.
The euro rose 0.1% on Tuesday, the second profit in a row away from 3-⅕ month lows att $1.0761.
Spanish Prices
Spain’s consumer prices rose 1.8% in October, up from 1.5% in September, and above estimates of 1.7%.
Renewed price pressures in the eurozone’s fourth largest economy indicates that the fight with inflation is now completely over, and hurts the odds of an ECB rate cut later this year.
European Rates
The odds of a 0.25% interest rate cut by the European Central Bank in December fell from 95% to 90%.
Now investors await similar data for Germany and the eurozone later today and tomorrow.
Aussie skids to 2-1/5 month low as inflation cools
The Australian dollar tumbled in Asian trade on Wednesday to 2-⅕ month lows against the US dollar, sharpening the decline for the fourth straight session after inflation in Australia cooled to three-year lows, reducing the pressure on the Reserve Bank of Australia.
The new data boosted the odds of an interest rate cut by the RBA in December, as investors await more clues and evidence.
The Price
The AUD/USD fell 0.4% today to 0.6537, the lowest since August 8, with a session-high at 0.6571.
The Aussie also lost 0.35% against the greenback on Tuesday, the third loss in a row as US long-term treasury yields rallied.
Australian Inflation
Earlier government data showed Australian consumer prices rose 2.1% y/y in September, the slowest pace since July 2021, and below estimates of 2.3%, and down from 2.7% in August.
The data clearly shows that inflation is on the cusp of reaching the RBA’s medium-term target.
Australian Rates
Markets now expect the next step by the RBA is monetary easing, with the odds of a 0.25% interest rate cut in December surging.