The dollar index (DXY00) is down -0.35% today. The dollar is falling after weaker-than-expected US economic news on September retail sales and the September core PPI reinforced the chances of a Fed rate cut at next month’s FOMC meeting. Additionally, falling bond yields have weakened dollar interest rate differentials after the 10-year Treasury yield fell to a 3.5-week low at 4.002% today. The dollar extended its losses after the US Conference Board’s November consumer confidence index fell more than expected to a seven-month low.
US Retail Sales in September rose +0.2% MoM, below expectations of +0.4% MoM. September retail sales, excluding automobiles, rose +0.3% MoM, right in line with expectations.
US September PPI final demand rose +2.7% YoY, stronger than expectations of +2.6% YoY. However, the September PPI excluding food and energy rose +2.6% year-on-year, below expectations of +2.7% year-on-year.
The US September S&P CaseShiller Composite-20 Home Price Index rose +1.36% YoY, weaker than expectations of +1.40% YoY and the slowest pace of increase in more than two years.
The US Conference Board’s November consumer confidence index fell -6.8 to a seven-month low of 88.7, weaker than expectations of 93.3.
US Pending Home Sales in October increased +1.9% MoM, stronger than expectations of +0.2% MoM.
Markets are pricing in an 80% chance that the FOMC will reduce the fed funds target range by 25 bps at the next FOMC meeting on December 9-10.
EUR/USD (^EURUSD) is up +0.50% today. The weaker dollar today supports the euro. The euro also found support in today’s economic news that showed new car registrations in the eurozone in October increased for the fourth consecutive month. Additionally, improved prospects for an end to the war in Ukraine boosted the euro after Ukraine said it had accepted the terms of a peace deal with Russia, although Russia has not yet said whether it accepts the deal.
New car registrations in the eurozone in October increased by +5.8% year-on-year to 917,000 units, the fourth consecutive monthly increase.
Swaps are pricing in a 2% chance that the ECB will cut rates by -25 basis points at the December 18 policy meeting.
USD/JPY (^USDJPY) is down -0.57% today. The yen is rising against the dollar today on concerns that the Japanese government is close to intervening in the currency market to support the yen after Japanese Growth Minister Kiuchi said the government is watching currency movements, including speculative activity, with a high sense of urgency. Today’s drop in Treasury yields also supports the yen.