ACY Securities

The EUR/USD exchange rate has remained relatively stable following the European Central Bank's (ECB) recent policy announcement, which closely resembled the statement from September.

The US economy grew by 4.9% in the third quarter, boosted by strong consumer spending, and better than expectations of 4.5%. September US Durable Goods Orders jumped 4.7%, the biggest increase since July 2020.

The daily interaction between the USD and yields is proving to be rather unpredictable. In previous discussions, I've highlighted the USD's inability to fully capitalize on previous increases in US yields.

The US dollar experienced an unexpected and notably significant sell-off on Monday but rebounded strongly yesterday, effectively recovering all the losses from the previous day.

The Australian Dollar (AUD/USD) outperformed, climbing to 0.6358 (0.6318) even as the Greenback advanced against other rivals. It was risk-on, which was supportive of the Aussie against the Greenback as well as other currencies.

The yield on the 10-year US Treasury bond recently surpassed the 5.00% threshold for the first time since 2007.

The eurozone composite PMI decreased from 47.2 to 46.5 in October, which was slightly lower than the consensus forecast of 47.4.

The key macro event for the financial markets this week will be the ECB monetary policy announcement on Thursday. After raising their key policy rate by 25bps to 4.00% in September, they altered the forward guidance in the accompanying statement.

The Dollar breached the 150 Yen level, hitting 150.11 before slipping back to 149.90 in early Asian trade even as the US 10-year bond yield eased to close at 4.91% from 4.98% Friday.

The New Zealand dollar has displayed the poorest performance among G10 currencies on last Friday. The British pound, on the other hand, is not far behind, with recent data emphasizing the potential for a renewed economic downturn in the UK.

Federal Reserve Chair Jerome Powell's recent address to the Economic Club of New York (on last Friday 20/10/2023) has triggered speculation about a potential shift in the stance of the Federal Open Market Committee (FOMC), largely in response to the recent surge in U.S. Treasury (UST) bond yields.

Throughout this month, I've noticed that the Euro (EUR) has been undergoing a consolidation phase at relatively lower levels in comparison to the US Dollar (USD). After reaching an intraday low of 1.0448 on the 3rd of October, the EUR/USD exchange rate has subsequently rebounded towards the 1.0600-level.