The U.S. dollar edged out small gains overnight, the third day of such gains. The Bloomberg Dollar Index remains at a 3-month high as developments abroad have dictated trading.
USD
The U.S. dollar edged out small gains overnight, the third day of such gains. The Bloomberg Dollar Index remains at a 3-month high as developments abroad have dictated trading.
Later this morning, Markit US Manufacturing PMI is expected to show gains of 53.4 for October, up from 53.1 in the month prior. While the data may affect the trajectory of the greenback, headlines surrounding the progress of tax reform will likely take the spotlight. Congressional Republicans announced an aggressive plan for the timing of moving the legislation through the Capitol. It appears to be a thin needle to thread but the optimism over its passage has boosted the greenback.
The President is also reportedly “close” to announcing his pick to replace Janet Yellen as the head of the Federal Reserve. The decision will certainly affect the outlook for future monetary policy and the greenback will react accordingly.
EUR
The Euro has maintained a tight range early this week as traders pare bets before the European Central Bank meeting on Thursday. The ECB has remained ultra-accommodative for nearly a decade and now policy makers are expected to announce a plan to reel in some of their bond purchases. At their last policy meeting in September, ECB President Mario Draghi indicated that the bulk of decisions regarding the asset purchase program are likely to be made this month. The uncertainty regarding the amount and the timing of purchases has kept the Euro in check. However, Thursday should be a volatile day as traders will digest the decision.
NZD
The New Zealand dollar was the biggest loser overnight, falling against all of its rivals including nearly 1.0% versus the U.S. dollar. The “kiwi” dropped as the incoming Labour party laid out their left-leaning policies. The Prime-Minister elect said his new government intends to review and reform the country’s Reserve bank, without giving further details. In addition, the Labour party wants to increase the minimum wage to $20NZD an hour and make significant investment into the country’s regional rail system.
The Kiwi is nearly 4.0% weaker since last Wednesday’s close.
