Caution over the weakness of European currencies

Caution over the weakness of European currencies

07.10.2021

Yesterday, the three major U.S. stock indices all rose toward the close, resulting in a market environment characterized by rising stock prices, higher interest rates, and lower oil prices. As concerns over a U.S. government default eased, buyback activity emerged, causing stock prices to climb in the final hours of trading. The Russell 2000, which tracks small-cap stocks, was unable to recover from the previous day’s decline and closed down 0.6% at 2,214.

In the foreign exchange market, the pound, which had been rebounding, has resumed its downward trend, with GBP/USD trading around 1.358. On the hourly chart, GBP/USD appears to be forming a triple top pattern, so this is a point where we need to carefully assess whether the currency will continue to show significant weakness against the U.S. dollar and maintain its downward trend.

Today’s schedule includes German industrial production and UK Halifax house prices at 3:00 PM, French trade balance and current account at 3:45 PM, the ECB meeting minutes and U.S. Challenger job cuts at 8:30 PM, U.S. initial jobless claims at 9:30 PM, and U.S. Fed Governor Williams at 9:40 PM:NY Fed President, at 11:00 PM: Canada’s Ivey PMI, at 11:30 PM: US weekly natural gas inventories, at 12:45 AM: US – Mester: Cleveland Fed President’s remarks, at 1:00 AM: Canada – Macklem, BOC Governor’s remarks, and at 4:00 AM: US consumer credit balances.Ahead of tomorrow’s U.S. jobs report, we will be closely monitoring the strength and weakness of the U.S. dollar and European currencies.