Market Watch: Dollar is strong

Financial and commodity markets analytics

Dollar is stronger in a quieter market. The initial gains in the Australian dollar that were scored as a result of the slightly lower decline in Q3 CPI are now unwound. The dollar is also still within striking distance of JPY150, where some are still apprehensive about a possible BOJ intervention. The Canadian dollar is close to the low of the month ahead of the Bank of Canada's meeting. The Bank of Canada is expected to keep the policy rate at 5.0%.
Gold has been consolidating within a narrow band. Geopolitics may be supporting gold despite the stronger dollar and higher yields.
After a three-day decline that saw December WTI drop 5%, it is now stabilizing.

Asia Pacific
Kishida's government is currently preparing a budget supplement that will include a temporary cut in income taxes for one year, as well as extending subsidies on electricity, gasoline and household gas until March or April of 2024.
Japanese officials expressed their concern over the weakening yen and warned the market about the increased threat of intervention.
The dollar has recovered from yesterday's session low in Europe, near JPY149.30. The range is extremely narrow, only 15 pip above JPY149.80.

Australia reported that Q3 inflation was not as slow as expected.
In response to the stronger than expected CPI, the Australian dollar rose almost half a cent to $0.6400 but then stalled. It has been steadily declining and reached session lows near $0.6330 in Europe.

Today, the eurozone released money supply data ahead of tomorrow's ECB meeting. The M3 growth in the eurozone peaked at 12.6% in 2007, and it will also peak in January 2021. M3 growth slowed from 2008-2009, and then went negative by late 2009-2010. The money supply is shrinking faster now. In July, it shrank by 0.4 percent, then -1.3%, then -1.2%, in August and September.
In the morning of European time, the euro dropped to $1.0565.

The price movement of sterling's upward correction from the lows on October 4 was as bad as the euro.

The US, in contrast to Japan, saw its preliminary October PMI improve. Today, the US reported new homes. A small increase is expected after August's sharp drop of 8.7%. The focus will be on the Q3 GDP tomorrow.

Today, the Bank of Canada is meeting. The Bank of Canada is under little pressure to act, as September inflation, including core measures, was lower than expected.
Yesterday, the US dollar fluctuated between both ends of Monday's range and closed below its high. It was still the strongest closing for the greenback in October 4.