Written by Steven Dooley, Head of Market Insights
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Global overview
The US dollar jumped from three-week lows after a much hotter-than-expected inflation report. The AUD/USD fell back towards 11-month lows. Today, all eyes are on the Monetary Authority of Singapore meeting.
Greenback stages comeback after CPI
The US dollar’s recent pullback has well and truly reversed after last night’s hotter than expected inflation reading saw the greenback stage a comeback.
While the core inflation number was in line with expectations – at 4.1% in annual terms – the headline number was higher than expected at 3.7% in annual terms. The market forecast was for 3.6%.
The US dollar surged as markets looked ahead to further US rate hikes.
The AUD/USD and NZD/USD both fell 1.6%. The USD/CNH gained 0.1%.
MAS decision in focus
The USD/SGD was 0.5% higher ahead of today’s Monetary Authority of Singapore meeting.
Singapore GDP is also due today. The market expects the advance estimate to indicate a small slowdown in GDP growth from 0.5% (Q2) to 0.4% (Q3) on a YoY basis. That said, the market expects that growth will increase from 0.3% (Q2) to 0.5% (Q3) on QoQ basis, driven by an improvement in the tourism sector, which should counteract the ongoing shrinkage of the goods-producing sector caused by a slowdown in electronic demand.
Due to growing worries about the prospects for GDP, we anticipate the Monetary Authority of Singapore (MAS) will maintain its current position on foreign exchange policy. However, elevated core inflation and ongoing labor market tightness mean the MAS is likely to maintain a tightening bias.
US consumer confidence due
In October, the market expects that the preliminary index of consumer sentiment from the University of Michigan will decline from 68.1 to 67.2. Sentiment probably declined because of declining stock values and rising political unpredictability.
In addition, there were growing worries of a government shutdown at the beginning of the survey period.
USD stages comeback
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 9 – 14 October
All times AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
