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US dollar eases from 10-month high

Friday, September 29, 2023

Today’s headlines

What’s happening: The US dollar moved lower on Thursday, as investors digested recent economic reports.

What happened: The US dollar index fell on profit-taking, after hitting a ten-month high on Wednesday.

The greenback is still on course to end the week with gains after the Federal Reserve’s hawkish comments last week.

Why it matters: The Fed kept interest rates unchanged at its September meeting last week but signalled another hike before yearend. Remarks from various policymakers have also triggered speculations of at least one more rate hike by the US central bank in 2023.

Data released on Thursday showed fairly strong US economic growth of 2.1% in the second quarter. Initial jobless claims also rose lower than projected, by 2,000 to 204,000 for the week ended September 23, signalling strength in labour market.

Corporate profits in the US grew by 0.5%, while pending home sales declined by 7.1% in August, recording the steepest plunge since September 2022.

The US benchmark 10-year yields also climbed to their highest level since 2007 on Thursday.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell more than 0.4% to 106.22 on Thursday. However, the index is still on track to posting gains for the 11th straight week and is only slightly below its ten-month high of 106.84 recorded on Wednesday.

The EUR/USD forex pair added around 0.6% to reach 1.0568, compared to its January low of 1.0482. The GBP/USD pair gained about 0.6% to 1.2205 during Thursday’s session.

What to watch: Investors await the release of economic reports on personal income, spending, PCE price index and wholesale inventories from the US today. Personal spending in current dollars in the US, which surged by 0.8% in July, is expected to rise by 0.6% in August.

Analysts expect personal income to rise by 0.3% in August, following a 0.2% increase in July. The annual rate for core PCE prices, considered as the Federal Reserve’s preferred inflation gauge, is expected to ease to 3.8% in August, from 4.2% in July. Wholesale inventories are projected to decline by 0.1% in August, compared to a 0.2% decline in July.

The markets today

Shares of Nike will be in focus today after the company released results for its first quarter

Context: Nike’s shares rose sharply in after-hours trading on Thursday, following better-than-expected quarterly earnings.

Details: US consumers have been reducing their discretionary spending, which has negatively impacted the wholesale business of the athletic footwear and apparel company.

Nike’s sales declined in its largest market, North America, while sales in other major regions recorded growth.

The company’s North America sales contracted by about 2% year-over-year, while sales in Greater China grew around 5%. European sales surged 8%, while sales in Asia Pacific and Latin American rose 2% in the quarter.

Nike’s overall revenues grew 2% year-over-year to $12.94 billion, marginally missing the consensus estimates of $12.98 billion. The company reported quarterly earnings of 94 cents per share, topping Wall Street expectations of 74 cents per share.

Nike’s Direct revenues climbed 6%, while Nike Brand Digital sales rose 2%. Its wholesale revenues came in flat in the first quarter.

The athleisurewear company’s gross margins shrank 10 basis points to 44.2%, while inventories fell 10% year-over-year to $8.7 billion.

How shares responded: Nike’s shares gained 7.9% to $96.67 in the extended trading session following the release of quarterly results. The stock has lost around 12% over the past month.

What to watch: Investors will continue monitoring discretionary spending of consumers, specifically in the US. Markets will also keep an eye on global economic growth.

Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.11%, 0.70%, 0.63% and 0.36%, respectively.

The news shaping the markets

Russia announced plans to increase its defence spending by 70% to gain an edge in its ongoing war with Ukraine. The news sent the safe-haven US dollar index slightly lower this morning.


Australia’s private sector credit rose by 0.4% in August, following a 0.3% increase in the prior month, which lent support to the AUD/USD forex pair.


Japan’s unemployment rate came in unchanged at 2.7% in August, higher than market expectations of 2.6%, which sent the JPY/USD pair lower in forex trading this morning.


New Zealand’s ANZ Roy Morgan Consumer Confidence Index rose to 86.4 points in September, from 85 in the previous month, lending support to the NZD/USD forex pair.


The Bank of Mexico held its benchmark policy rate at a record high of 11.25% at its latest meeting, which sent the MXN/USD pair higher in forex trading this morning.

What else to watch today

Germany’s retail sales, import prices, unemployed persons, unemployment change and unemployment rate, South Africa’s money supply M3, private sector credit and balance of trade, UK’s current account, GDP growth rate, business investment, mortgage approvals, mortgage lending, consumer credit, net lending to individuals and money supply M4, France’s inflation rate, producer prices and household spending, Turkey’s balance of trade, Spain’s current account and consumer confidence indicator, Eurozone’s inflation rate, Italy’s inflation rate and industrial sales, India’s construction output, foreign exchange reserves and central government budget value, Brazil’s unemployment rate and government budget value, Canada’s GDP growth rate and government budget value, US goods trade balance, Chicago business barometer, University of Michigan consumer sentiment and Baker Hughes crude oil rigs, as well as Russia’s money supply M2.


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