- EUR/USD has displayed a mild correction amid a marginal DXY recovery.
- The risk-on profile is intact as S&P 500 futures are stuck to their extended gains.
- ECB Lagarde may announce a rate hike by 75 bps to curtail price pressures.
The EUR/USD pair has witnessed selling pressure after multiple failed attempts to overstep the critical hurdle of 0.9880. The asset has not turned bearish yet, as the risk profile is exceptionally cheerful. This could be merely a healthy correction in the asset’s upside journey.
S&P500 futures have extended their gains after an upbeat Tuesday, which indicates that the market mood is solid. Meanwhile, the US dollar index (DXY) is defending the downside bias and holding itself above 112.00. The 10-year US Treasury yields have accelerated above 4.02%.
The euro bulls are expected to turn toward the north amid soaring bets for European Central Bank (ECB)’s hawkish monetary policy. Reuters poll on ECB’s rate hike extent states that ECB President Christine Lagarde will step up the interest rates by 75 basis points (bps) on October 27. European Harmonized Index of Consumer Prices (HICP) trades five times higher than the targeted rate of 2%. Therefore, efficiency in policy tightening is required to contain mounting inflation.
The outcome of a Reuters poll states that the bloc's central bank will take the deposit rate to 1.50% and the refinancing rate to 2.00%.
On the US docket, recession fears are accelerating as the Federal Reserve (Fed) prepares to announce one more bumper rate hike in the first week of November. Price pressures have not softened in response to the pace of the Fed’s rate hiking spell. And Fed’s main agenda is to bring price stability.
Going forward, Wednesday’s Housing Starts data that reflects retail demand for real estate will hog the limelight. The economic data is expected to decline to 1.475M against the former release of 1.575M. It seems that accelerating interest rates by the Federal Reserve (Fed) have started displaying their consequences. Higher interest rates are forcing retailers to postpone their demand for personal property.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
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Eurozone PMI sounds the alarm about growth once more
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