USD continues to gain on monetary tightening hopes

The Euro is in a weakened state right now. GBPEUR spiked to €1.1830 yesterday and is still above €1.18 this morning. The EURUSD rate is down to levels we haven’t seen since March 2020. There appears to be some support for the shared currency at $1.17 but, if that gives way, as mentioned yesterday, we could see much deeper drops in this pair.

Having looked likely to test $1.40 at the end of July, the Sterling – US Dollar rate has struggled since then. GBPUSD is down to $1.3820 this morning. We can see in other USD related rates, the strength of the Dollar, driven principally by stronger employment data and the anticipation of tighter US monetary policy, is omnipresent. The midpoint between last year’s low and this year’s high would be around $1.3450, so as long as this pair stays above that 50% retracement level, the upward trend is fairly intact but that would be a long drop for USD buyers. The lowest we have seen this year is $1.36, so that may be the first target.

AUD hit by drop in consumer confidence

The Australian Dollar remains on the back foot after a minus 4.4% reading on the Westpac consumer sentiment index. It is to be expected that various covid related lockdowns would dampen consumer confidence but it does add to concerns over an extended economic recovery. GBPAUD is up to AUD 1.8850 and looks comfy here.

Zloty weakens on government collapse

The Sterling – Polish Zloty exchange rate is at PLN 5.41 this morning, the highest level since April. On the news that the ruling coalition in Poland has collapsed. The various factions have been disagreeing on the economic recovery plan and that brought about the dismissal (or resignation) of the head of the Accord party. Further PLN weakness cannot be ruled out while this situation endures.

We will see a little bit of Eurozone inflation data this morning but little else. The US inflation data this afternoon will most likely be overshadowed by the crude oil inventories data and a couple of Federal Reserve speeches. But it is a quiet day for market news other than that.

And amongst other things, it is ‘Play in the Sand Day.’ I am loving it but the vacuum cleaner is going to be working overtime in the office when I’m finished.

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