USD remains near 18-month high as the euro weakens & oil prices climb
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From Wayne Van Drunick, on behalf of David Stritch, Senior Multicurrency Analyst, Caxton
U.S. dollar remains near 18-month high as the euro weakens and oil prices climb
The U.S. dollar is holding close to an 18-month high this morning. Rising oil prices are adding to expectations that U.S. interest rates could go higher, and that is lifting the dollar against most major currencies. The euro is under the most pressure.
Key themes
- Focus on U.S. inflation. Markets are waiting for tomorrow’s U.S. core CPI data. Core CPI is inflation excluding food and energy. A higher-than-expected figure would strengthen the case for rate hikes and could push the dollar higher again.
- Oil and rate expectations. Oil prices are rising. Higher energy costs feed into inflation, and markets are now pricing in a greater chance of U.S. rate hikes. Both factors are supporting the dollar.
- GBP/EUR near its strongest level. The pound is trading close to its best level against the euro as concerns about French government debt weigh on the single currency.
Economic calendar for the rest of the week
| Date | Release |
|---|---|
| Wed 14 Oct | U.S. Core CPI |
| Thu 15 Oct | Retail Sales; Core Retail Sales |
| Fri 16 Oct | EU CPI |
Opening rates (13 October)
| Currency pair | Open |
|---|---|
| GBP/USD | 1.3207 |
| GBP/EUR | 1.1840 |
| GBP/CAD | 1.8862 |
| GBP/AUD | 1.8984 |
| GBP/NZD | 2.3640 |
| GBP/JPY | 209.54 |
| EUR/USD | 1.1189 |
The view: With the dollar strong and the euro under pressure, this week’s inflation data could move rates quickly. If you have euro or dollar payments coming up, now is a good time to review your timing. A forward contract lets you fix an exchange rate today for a payment you will make later. You can talk to Caxton’s multicurrency dealers about whether that suits your needs.
This update is for information only and does not constitute financial advice. Exchange rates can move quickly and past performance is not a guide to future performance.
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