The US dollar has not advanced this week on the back of war drums or geopolitical tensions. Instead, it continues to edge higher for more ordinary but equally persistent reasons: there simply hasn’t been enough “fuel” for the bears to justify short positions at the week’s opening levels. Traders hoping for a flow of weak US data to support dollar selling instead found an “empty plate,” and that absence alone has underpinned the greenback.

One-week G10 funding rates still grant the dollar a 4.14% annualized yield — hardly an incentive to stay short. (This explains why players have remained in narrower ranges over the past two weeks.) Adding to this, US housing data showed new home sales jumping back to early-2022 levels, forcing the market to acknowledge that slowdown is not yet the main narrative. Even Fed Funds pricing — which bottomed in mid-September — has ticked up by 5 basis points. A modest move, but enough to show that the “cut 50 bps now” camp is not in control.

Today’s data slate includes jobless claims and existing home sales. Jobless claims are expected to fall again to around 230,000, erasing the earlier spike to 264,000 (later revealed to have stemmed from fraud in Texas). A steady labor market is not the kind of feed bears can use against the dollar. Existing home sales may come in weaker — consensus at 3.95 million units annually — but that is unlikely to draw much attention after the “surge” in new homes.

Meanwhile, eight Fed speakers are lined up like actors on a crowded stage. Steven Miran is expected to reprise his familiar role as an “ultra-dovish hawk,” pushing for faster and deeper cuts. But the market knows his script well; his voice alone won’t move the dollar unless a broader “chorus” of Fed officials joins in.

The dollar index (DXY) hovers near 98, like a ship stuck in still waters. Without softer US data to provide the bears with wind, the dollar remains stagnant, frustrating those who bet on its decline.

As for the euro, its latest slide looked more like “local data disappointment” than genuine dollar strength. German Ifo readings burst the bubble of optimism, reminding markets that “fiscal stimulus” often resembles creative accounting more than fresh spending. Europe may find firmer ground later, but patience is required. With no ECB headlines today, EUR/USD stays at the mercy of US flows. A break below 1.1725 could open the way to 1.1675, though buyers remain “lurking in the shadows.”

The Japanese yen stays in the market’s crossfire. It managed a modest rebound after BoJ minutes reiterated willingness to raise rates “someday,” but that was hardly new. The spotlight instead fell on “Japanese political kabuki,” leaving the yen hostage to domestic developments. USD/JPY held its rebound, but its technical outlook remains bleak unless the US delivers a string of stronger-than-expected data.

For now, the US dollar retains the upper hand not because it has seized power with overwhelming force, but because the “opposition” is too weak and divided to mount a serious challenge. In markets, inertia can sometimes be the most powerful force of all.

Gold prices rose in the European market on Thursday, resuming gains after pausing yesterday, and moving closer to all-time highs. The advance came as the US dollar halted its climb against a basket of major currencies.

With Federal Reserve officials adopting a more cautious tone, the likelihood of two US interest rate cuts before the end of this year has diminished. To reprice those expectations, investors await key US economic data later today.

Price Overview

• Gold prices rose by about 0.7% to $3,761.66, from the opening level of $3,736.06, after hitting a low of $3,729.62.

• On Wednesday, gold settled down by 0.75%, marking the first loss in four sessions, as profit-taking pulled it back from an all-time high of $3,791.13 an ounce.

US Dollar

The dollar index fell by 0.1% on Thursday, retreating from a two-week high of 97.92 points, reflecting the pause in the US currency’s advance against major counterparts.

Beyond profit-taking, the US dollar weakened as investors avoided building additional long positions, preferring to wait for further clues on the Fed’s interest rate path.

US Interest Rates

• Fed Chair Jerome Powell said on Tuesday that the central bank will continue to balance concerns about a weakening labor market with mounting worries about inflation.

• According to the CME FedWatch tool, the probability of a 25-basis-point rate cut at the October meeting is currently priced at 92%, while the chance of leaving rates unchanged stands at 8%.

• Investors are awaiting key US data later today, including second-quarter GDP and weekly jobless claims, to reassess these expectations.

Outlook for Gold

Brian Lan, managing director of Singapore-based GoldSilver Central, said: “I don’t think inflation data will have much of an impact on gold unless it’s exceptionally high.” He added: “From our quantitative market view, the long-term outlook remains very positive.”

SPDR Fund

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 3.72 metric tons on Wednesday, bringing the total to 996.85 metric tons, down from 1,000.57 metric tons — the highest level since August 3, 2022.

The Swiss National Bank announced its interest rate decision on Thursday morning, following the September 25 meeting. The bank kept rates unchanged at 0.00%, the lowest level since June 2022, in line with market expectations. This marks a temporary pause in the monetary easing cycle, which had continued over the past six consecutive meetings.

• This statement is “positive” for the Swiss franc.

The Swiss franc rose in European trading on Thursday against a basket of global currencies, resuming gains against the U.S. dollar as the greenback’s rally paused ahead of key U.S. economic data releases.

The franc’s advance, however, remains limited, with investors refraining from building large positions ahead of the Swiss National Bank’s (SNB) policy decision, where rates are widely expected to remain unchanged.

Price Overview

USD/CHF today: the dollar slipped 0.1% to 0.7938 francs, down from the opening level of 0.7947, after touching a high of 0.7951.

The franc ended Wednesday down about 0.5% against the dollar, snapping a three-day winning streak, after cautious remarks from some Federal Reserve policymakers.

U.S. Dollar

The U.S. dollar index fell 0.1% on Thursday, retreating from a two-week high of 97.92, reflecting a pause in the dollar’s upward momentum against global currencies.

Beyond profit-taking and corrections, the dollar is easing ahead of key U.S. releases on Q2 GDP growth and weekly jobless claims. These data are expected to provide clearer signals on whether the Federal Reserve will continue cutting rates in the remainder of the year, particularly after the cautious tone expressed by Fed officials.

Swiss National Bank

The SNB concludes its regular policy meeting to assess economic conditions, with markets expecting no change in rates, which remain at 0.00%.

This decision would mark a pause in the monetary easing cycle that began in September 2023 and continued through the June meeting, coming against a backdrop of mounting inflationary pressures, especially from external factors.

The policy rate decision is due at 08:30 GMT, followed by remarks from the SNB Chairman and other officials at a press conference at 09:00 GMT.

Outlook for the Swiss Franc

Here at Economies.com, we expect the franc to continue rising against the U.S. dollar if the SNB delivers comments and projections that are more hawkish than markets currently anticipate.