USD Falls After Donald Trump's Comments, Risk Sentiments Stabilized

Market Reviews

US dollar weakens, as it is pressured by retreat in treasury yields as well as US President’s comments on Fed policy. Euro is the weakest one, followed by US dollar. Meanwhile, Australian dollar is the strongest, followed by New Zealand dollar. Japanese yen is trading lower, as risk sentiments stabilized.

On stock markets, US indices closed lower overnight but losses were limited. DOW dropped by 0.21%, S&P 500 lost 0.14% and NASDAQ gained 0.03%. In Asia, Nikkei fell by 0.08%. Singapore Strait Times declined by 0.76%. Hong Kong HSI increased by 0.43% and China Shanghai SSE dropped by 0.18%.

US 5-year yield closed down-0.016 to 3.057, 10-year yield fell 0.025 at 3.208, 30 year yield dropped 0.035 at 3.368. Italian 10 year yield breached 3.7 handle yesterday but reversed from there to close at 3.511.

US President Donald Trump criticized Fed’s rate hikes again. He said “I think we don’t have to go as fast”. And, he was “worried about the fact that they seem to like raising interest rates, we can do other things with the money.” On the economy, Trump said “the numbers we’re producing are record-setting,” apparently referring the lowest unemployment rate in around 40 years. And, he added “I don’t want to slow it down, even a little bit, especially when you don’t have the problem of inflation”. And, on inflation he said “you don’t see that inflation coming back. Now, at some point it will and you go up”.

Dominic Raab (UK Brexit Minister) said yesterday that the European Council meeting next week will be an ” important milestone” for Brexit negotiation. He remained confident that the sides will reach a deal this autumn. His refrained comments suggested that he is targeting to complete the deal in November rather than October, as not enough progress was made.

Consumer confidence in Australia recovered in October. Australia Westpac consumer confidence rose 1.0% in October. Today’s data also showed, that Japan machine orders rose by 6.8% mom in August versus expectation of 3.6% mom fall.

UK economic data will be in focus today. Monthly GDP, trade balance, industrial and manufacturing production data will be published.