31.10.2019: US dollar weakens further

31.10.2019: US dollar weakens further


The US dollar is still losing ground against majors following the Federal Reserve’s decision taken yesterday. The market sentiment is also affected by the news from Japan and Chile. Today, the Bank of Japan has kept its interest rate at minus 0.1 percent as expected and downgraded its outlook for the country’s economic growth. The demand for safe-haven assets remains high due to the cancellation of November APEC summit where Donald Trump and Xi Jinping were scheduled to meet. Since the second half of the week, the euro traders have been active. As a result, the euro/dollar pair reached the highest level of the previous trading week – 1.1170. The pair has been rising for the fourth straight session. Moreover, it extended gains amid the Fed’s decision to lower its interest rate by 25 basis points. Although it was a widely expected move, the US dollar weakened. Massive sell-off of the American currency was also caused by increased doubts about a forthcoming US-China trade deal. Meanwhile, investors are studying the Eurostat’s report on inflation in the EU member states. According to preliminary data, the consumer price index edged down to 0.7% in October, as forecasted. Interestingly, it is the lowest rate of growth since November 2016. This figure confirms the need for decisive stimulus measures from the ECB. At the same time, investors were pleased by the data on the euro area GDP growth rate. The economy expanded 0.2% in the third quarter, exceeding a 0.1% growth forecast. This news contributed to the euro’s rally as well. The British currency also took advantage of the US dollar’s weakness. It climbed by 100 points to 1.2960 with a view to test the resistance level of 1.30. Now traders are awaiting the data on Core PCE, as well as personal spending and income from the US. We keep close tabs on the market development. Stay tuned!

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