USD Weekly Review (Oct. 14 – 18)

The U.S. dollar turns in an all around weak performance on a combination of positive developing geopolitical themes and weak U.S. economic updates.

United States Headlines and Economic data

Monday:

• Mixed price action for the Greenback, which was moving against the majors as it usually does during risk aversion environments (higher against the “risk currencies” / lower against the “safe haven”).  The global risk- off vibes was likely on a combination of weak economic data from China (imports and exports fell more than expected in September) and doubts began to rise on the recent ‘phase 1’ trade agreement between the U.S. and China after China says it wants more talks before signing trade deal with Trump
• Empire State index shows slightly better factory activity in October

Tuesday:

• Fed’s Bullard: Risks remain high and Fed is on a ‘meeting by meeting’ basis
• Fed’s Daly says important to get inflation to target
• Risk sentiment quickly flipped to positive after news of a Brexit deal between the U.K. and EU was close to being drafted, and was likely the driver for that broad pullback in Greenback, especially against Sterling.

Wednesday:

• The broad weakness for the Greenback during the Wednesday session is likely attributed to the unexpected weak US retail sales read, signalling the  consumer economy could be cracking.  And it’s likely the doubts about China’s promise to purchase more US farm products weighed on USD as well.
• Homebuilder confidence surges to highest level in nearly two years, thanks to lower mortgage rates
• U.S. business inventories unchanged in August
• Fed’s Evans says no more rate cuts are needed this year
• Fed Beige Book reports ‘slight’ growth in some regions

Thursday:

• Philly Fed manufacturing index stumbles in October
• U.S. housing starts fall 9%, but high permits, low mortgage rates suggest construction slowdown is temporary
• U.S. Industrial production fell back 0.4% in September after advancing 0.8% in August
• China says it hopes to reach phased trade pact with U.S. as soon as possible – this seems to have sparked broad risk on sentiment on the session, which was likely a contributor to the Greenback’s weakness during the U.S. trading session after a bad string of U.S. economic updates

Friday:

• Fed’s Williams: Central bank will adjust response to money market volatility ‘as appropriate’
• Clarida reiterates that the Fed is not locked into a set interest rate path
• Dallas Fed’s Kaplan says ‘agnostic’ on need for rate cut in October