Dollar Heads For One Month Low as Forex Markets Week Ends

The US dollar was set to spend Friday rounding off a gloomy few days after it saw a 1.2% decline over the space of the week.

The dollar index, which assesses the greenback’s performance compared to a number of other major global currencies, hovered around 96.30 as trading opened on Friday following a drop to 96.168 over the night.

It comes after the US Federal Reserve indicated that interest rate rises were not going to be quite so frequent as had been expected.

It also comes in the face of political instability too. A US government shutdown in the near future is a distinct possibility if lawmakers are unable to agree on how to proceed with budgeting.

With long-term US Treasury yields now heading towards their lowest point in nine months, the currency began to suffer significantly.

However, while the dollar may have lost out, other global currencies were able to gain.

The pound managed to rise 0.1% against the US dollar, reaching $1.2669 at one stage. However, any further rises were contained by the Bank of England’s decision to avoid any further interest rate rises.

The euro, for example, rose 0.15% in the EUR/USD pair to reach $1.1460. It was expected to show an overall 1.4% rise over the course of the week – in spite of problems over Brexit continuing to persist.

As the last major working day for the foreign exchange markets prior to the holidays next week, there are still some key events due to take place.

At 10am, data on Italy’s non-EU trade balance for October will be released.

At lunchtime today, the Bank of England will release its quarterly bulletin covering the fourth quarter of the year. This is due to include commentary on market developments as well as monetary policy in the UK.

At 1.30pm GMT, the annualised US gross domestic product for the third quarter of the year is expected. This is forecast to hold firm at 3.5%.

US durable goods orders for November are expected at the same time. This particular metric is due to show a significant rise from -4.4% to 1.6%.

Core personal consumption expenditures for the third quarter of the year are due out at 1.30pm GMT, these are forecast to hold steady at 3.5%.

At the same time in Canada, retail sales data for October is due. Month on month, this is expected to rise from 0.2% to 0.4%. Excluding car sales, the data is forecast to rise from 0.1% to 0.2%.

Personal income data from the US covering November is due at 3pm GMT. This is expected to show a month on month drop from 0.5% to 0.3%.

Preliminary European consumer confidence data for December, meanwhile, is due to come out at 3pm GMT. This is due to show a change from -3.9 to -4.2.

The Michigan Consumer Sentiment Index compiled by the University of Michigan in the US is also expected at 3pm GMT. This will cover December and is due to hold firm at 97.5.