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Euro tries to recover as eyes fixed on Christine Lagarde

Euro rose in European trade above two-week lows against dollar ahead of ECB President Christine Lagarde's speech later, which might offer clues on the future of European interest rates. The greenback gave up two-week highs on transient profit-taking ahead of US payrolls data, crucial for deciding the future path of US monetary policies.

EURUSD rose 0.5% to 0.9796, after closing down 0.7% yesterday, the fourth loss in a row, plumbing two-week lows at 0.9730 on bullish remarks from Fed Chair Jerome Powell.

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Weekly Tradings

Euro is still down 1.7% this week against dollar on track for the first weekly loss in three, and the largest such loss since mid-September. Such repeating losses led to renewed concerns about divergent monetary policies between Europe and the US, with the ECB remaining one of the slowest major central banks in monetary tightening, especially compared to the aggressive Fed.

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Lagarde

ECB President Christine Lagarde is due to speak at an event hosted by the Bank of Estonia, and might offer some clues on future policies. Lagarde said on Tuesday that inflation remains extremely higher all over the euro zone and the ECB is still far from its inflation targets.
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The Dollar

The dollar index fell 0.5% on Friday away from two-week highs at 113.15 against a basket of major rivals. Such a dip came ahead of the all-important payrolls report for October, expected to decide the pricing for a potential 0.75% rate hike by the Fed in December.

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Euro Declines on Profit-taking after Biggest Daily Profit Since 2015​

Euro fell in European trade against a basket of major rivals on profit-taking after marking the biggest profit since late 2015 against dollar, however risks continue to surround the common currency. The dollar was boosted as well amid risk-averse sentiment with China asserting its commitment to strict Covid 19 restrictions, dashing hopes of reopening the world's second largest economy.

EURUSD fell lover 0.5% to 0.9902, after closing up 2.2% on Friday, the first profit in five days, and the largest since December 2015.

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Standing Risks​

The divergent levels of European and US interest rates are ongoing risks that continue hurting euro's standing, in addition to high energy costs and natural gas shortages. A historic increase in energy prices sent inflation considerably higher and hurt economic growth and the trade flow.
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Lagarde​

ECB President Christine Lagarde is preparing to present a speech organized by the European Commission in Belgium, which might offer fresh clues on the future of interest rates in the euro zone. Lagarde also noted the extremely higher inflation rates all over the euro zone, which remain far from the 2% targets.

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The Dollar​

The dollar index rose over 0.4% on Monday, recouping some of its hefty losses on Friday against a basket of major rivals. The dollar swooned on Friday after four Fed policymakers said they're considering raising interest rates at the next December meeting by a lower amount compared to the previous meeting.​

 

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Dollar widens losses ahead of mid-term elections

Dollar fell against most major rivals on Monday as risk appetite oscillates, losses mount ahead of Congressional elections. Tomorrow, the mid-term elections for both houses of Congress will be launched, with the Republican Party expected to remove Democrats from their current majorities.​

• Important US inflation data will be released later this week, and will help investors predict future Fed steps.​
• Recent US data released last week showed the economy added 261 thousand jobs in October, while analysts expected an addition of 220 thousand.​
• US unemployment rose to 3.7% last month from 3.5% in September, while analysts expected 3.6%.​
• The Fed decided last week to raise interest rates by 75 basis points as expected.​

The dollar index fell 0.6% to 110.2 as of 18:25 GMT, with a session-high at 111.2, and a low at 110.1.​

 

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Dollar Heads to more Losses Amid Geopolitical Uncertainty

Dollar fell against most major rivals on Tuesday amid geopolitical uncertainty, coinciding with today's US mid-term Congressional elections. Most analysts expect the Republican party to win most seats in this election, moving aside the Democrats from their current majority. Later this week, important US inflation data will be released and will provide clues on the Federal Reserve's next monetary policies.

The Federal Reserve decided last week to increase interest rates by 75 basis points as expected, the fourth such increase in a row to control inflation. The dollar index fell 0.4% to 109.6 as of 18:36 GMT, with an intraday high at 110.6, and a low at 109.3.​

 

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Euro resumes gains ahead of US inflation data​

Euro rose in European trade against dollar on track for two-month highs amid prospects of further policy tightening by the ECB. The greenback lost additional ground ahead of US inflation data in October, which will provide additional clues on the Fed's next rate hike in December.

EURUSD rose 0.35% to 1.0043, with a session-low at 1.0006, after falling 0.6% yesterday, the first loss in four days on profit-taking away from two-month highs at 1.0096.

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The ECB​

German two-year treasury yields are hovering near late 2008 highs at 2.252% recently. Such a spike to 14-year highs are based on expected policy tightening by the ECB soon to close the policy gap with the US.
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The Dollar​

The dollar index fell 0.3% on Thursday on track for two-month lows at 109.36 against a basket of major rivals. Such a decline comes ahead of major US inflation data in October, which will provide crucial clues to the Fed's December policy decisions. Currently, traders estimates a 67% chance of a 0.5% rate hike by the Fed in December, and a 33% chance of a 0.75% rate hike.​

 

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Sentiment boosted in markets after US inflation data

Global financial markets were boosted after US inflation data that showed a slowdown in prices in October. It's the fourth consecutive monthly slowdown in consumer prices, asserting a move away from record 9.1% inflation in June, as the Fed's aggressive policy tightening moves finally show their impact. Bets on a 0.50% rate hike by the Federal Reserve in December rose from 67% to 85%, while bets on a 0.75% rate hike tumbled from 33% to 15%.

Inflation Data

US consumer prices rose 7.7% in October y/y, less than the expected 7.9%, and down from 8.2% in the previous reading. Core prices, excluding food and fuel, rose 6.3%, less than the expected 6.5%, and less than 6.6%5 in the previous reading.


Global Markets

The dollar index slumped over 1.5% to 108.75, the lowest since September 13 against a basket of major rivals. Gold prices rose 1.75%, hitting two-month highs at $1,737 an ounce on track for the largest weekly profit since February.

Most European stock rose to two-month highs while Wall Street stock futures rallied as well ahead of the official opening.​

 

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Euro jumps to four-month high on German bonds

Euro rose in European trade against dollar after a short hiatus from gains, hitting four-month highs as two-year German yields hit 14-year highs ahead of expected ECB policy tightening. The dollar plumbed fresh three-month lows ahead of US producer prices data, important for gauging inflation in the economy. EURUSD rose over 0.8% to 1.0412, the highest since July 5, after closing down 0.3% yesterday, the first loss in three days after marking the largest weekly profit since March 2020.


German Yields

US two-year German yields rose over 4% after a short hiatus from gains, almost touching 14-year highs at 2.252%. It comes amid developments in the German bonds market as the ECB is expected to aggressively tighten policies and close the gap with the Fed.
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The Dollar

The dollar index fell over 0.7% to three-month lows at 106.09 against a basket of major rivals, following the largest two-day loss since early 2020. The selloff comes ahead of US producer prices data later today, expected to provide further clues on prospects of rate hikes in December. Markets are pricing in a 89% chance of a 0.5% rate hike in December, and just an 11% chance of a 0.75% hike.​

 

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Euro gives up four-month high on profit-taking

Euro fell in European trade off four-month highs on track for the first loss in three days on active profit-taking, while two-year German yields fell. Dollar rebounded from multi-month highs after strong data on US retail sales in October following remarks by Fed officials which asserted the continued efforts to bring inflation down. EURUSD fell over 0.3% to 1.0359, with a session-high at 1.0398, after rising 0.45% on Wednesday, the second profit in a row, marking four-month highs at 1.0481.

Such gains came as concerns about a wider conflict in eastern Europe subsided as the NATO stated the recent missile that hit Poland was probably a mistaken shot from the Ukrainian air defence force.


German Yields

Two-year German treasury yields fell over 0.6% today away from recent 14-year highs, in turn pressuring euro. A recent spike in yields to 14-year highs at 2.252% played a major role in recent extensive gains by the euro as the ECB prepares more aggressive policy tightening to come.


The Dollar

The dollar index rose 0.3% on Thursday away from three-month lows at 105.34, on track for first profit in three sessions against a basket of major rivals. The gains came after data showed US retail sales rose past estimates in October.

 

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Dow Jones - Index headed for August highs

Quotes of US stock indicators slowed their growth against the background of ambiguous rhetoric of officials of regional Federal Reserve Banks (FRB) regarding further prospects for raising interest rates. Thus, the head of the St. Louis Fed, James Bullard, noted that the regulator needs to continue the "hawkish" course, since the current interest rate level does not limit economic activity sufficiently. In his opinion, the target level of the value may range from 5% to 7%, however, if inflation in the USA slows down in the coming months and quarters, the US Fed will not have to tighten monetary policy as sharply as expected at the moment.

On the daily chart, the index quotes continue their corrective dynamics and increase, reaching a local maximum in early August at around 34000.

Support levels: 33180, 31750 | Resistance levels: 34000, 35350​