Dollar knocked-off 7 week highs

USD

The dollar pulled away from seven-week highs this morning, amid speculation that U.S. President Donald Trump’s choice for the next head of the Federal Reserve could be a less hawkish candidate than had previously been expected. A Politico report showed that Fed Governor Jerome Powell is favoured over former governor Kevin Warsh by U.S. Treasury Secretary Steven Mnuchin. Both Warsh and Powell were interviewed at the White House last week. The greenback had reached its highest since mid-August against a basket of major currencies on Tuesday, as equity indices shot to record highs on strong auto sales. Total vehicle sales posted their strongest rise so far this year as purchases were made to replace cars damaged by the hurricanes. The ISM non-manufacturing PMI and ADP non-farm employment change data are lined up today and these are considered leading indicators for the Non-Farm Payrolls figure. Fed Chair Janet Yellen also has a speech lined up and might have more clues on Fed policy biases.

EUR

The common currency was slightly weaker verses most of its contemporaries as political concerns owing to the elections in Catalonia continued to weigh down on the euro. Spanish unemployment change data printed a weaker than anticipated increase at 27.9K against the predicted 21.3K increase. Final services PMI readings and the region's retail sales report are lined up next, along with a speech by European Central Bank head Mario Draghi.

GBP 

The British pound was one of the weakest performers yesterday as it was weighed down by a dip in construction PMI figures. The reading slipped to 48.1 from 51.1 instead of holding steady as expected. The Bank of England Financial Policy Committee also judged that Brexit may pose a larger risk to the financial services and banking sector than was initially predicted.

CHF

The Swiss currency remained supported throughout the day in spite of absence of data from Swiss economy. Even though no reports due from the Switzerland today but the presence of risk-off sentiment, may render the franc the safe-haven asset investors may be looking for.

JPY

The Japanese currency held its own  as risk aversion kicked in owing to geopolitical risks. The Bank of Japan core CPI printed an increase to 0.6% from 0.4% to reflect stronger inflationary pressures and perhaps a possible shift to a less dovish stance for the BoJ in the near future. In addition, Japanese consumer confidence also hit a positive note as it printed an increase to 43.9 from 43.3 against the 43.5 prediction.

Gold

Gold prices rose on Wednesday after marking a 7-week low in the previous session, as the dollar pulled back from a 1-1/2-month high against a basket of currencies. Spot gold had risen 0.3 percent to $1,275.91 an ounce. It touched its lowest since mid-August at $1,267.76 on Tuesday.

Oil

Oil prices fell on Wednesday, pulled down by caution that a rally that lasted for most of the third quarter would not extend through the last three months of the year. U.S. West Texas Intermediate crude futures were at $50.10 per barrel, down 32 cents from their last close. They fell below $50 earlier in the session. Brent crude futures were down 47 cents at $55.53 a barrel.

Economic Calendar (all times in GMT)

• EUR ECB President Draghi’s Speech (17:15)
• USD Fed’s Yellen Speech (19:15)

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