The dollar continues to move higher this morning after a number of Fed speeches support the movement for a December rate hike. Overnight, comments from Fed Vice Chairman Stanley Fischer reiterated comments made Wednesday from Fed Chairman Yellen that the 2% inflation target was not that far off and despite some worries, the American economy may be more prepared for a hike than some believe. The Bank of England held their most recent policy meeting, and not to anyone’s surprise, left rates unchanged. Also on the docket was the Quarterly Inflation Report, which caused for a bit of selloff in Sterling following some surprising comments from Chairman Mark Carney. The euro, after falling to July lows on Wednesday, rebounded a touch after some second tier factory data. Stocks in Asia and Europe were mostly a sea of green as Fed optimism continues to wash over global markets, and points to another higher open in North America.
The euro made a run at July lows on Wednesday but it can really be blamed on a US dollar led move, based on the Fed comments mentioned earlier. It’s been fairly quiet this week from a European data perspective with only Chairman Draghi eliciting much after he repeated claims the central bank is keeping all measures on the table to extend the current QE program. Despite much weaker German factory orders for September (-1.7% vs +1.1 exp.), the EUR/USD rate has bounced nicely this morning and is about 0.5% above this week’s lows. Bank of England Head Mark Carney made some interesting comments at the Quarterly Inflation Report, stating that if and when hikes begin, the process to normalize would be more gradual and limited. Sterling, which had been unchanged after the most recent BoE policy meeting, lost about 1% on these remarks. Mr. Carney also noted inflation could return to the bank’s 2% inflation target at some point in the next two years.
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