U.S. Dollar Mostly Fell Against G-10 Currencies

  • The U.S. dollar fell 0.05% to 105.40 against the yen.
  • Little confidence that the pound will "recover too much vitality" in 2021.
  • Euro remains under pressure against other major currencies such as the pound, yen, and Swiss franc.

On Friday (October 16), most of the US dollar fell against G-10 currencies. Previously released data showed that US retail sales grew faster than expected, and consumer confidence rose slightly in early October. The pound is stable as traders still have hope for the prospect of a trade agreement between the UK and the EU, and the two sides will continue negotiations next week. SEK and CAD led G-10 currencies.

The G10 currencies are ten of the most heavily traded currencies in the world, which are also ten of the world’s most liquid currencies. Traders regularly buy and sell them in an open market with minimal impact on their own international exchange rates. The origin of the term G10 currencies is not clear, however it may be derived from the G-10 countries and their agreement to participate in the IMF General Arrangements to Borrow (GAB).

The dollar index fell 0.09% to 93.70, and the weekly gain shrank to 0.69%. Euro against the dollar rose 0.09% to $1.1718; the euro this week, a decrease of 0.9%, previously provided support in buying below 1.1700 near 1.1800, and option-related selling limited the gains.

The U.S. dollar fell 0.05% to 105.40 against the yen; the weekly decline was 0.21%; the yen has been tough as the number of global new coronavirus cases accelerates and the US stimulus plan continues to face uncertainty.

The pound rose 0.05% against the dollar to $ 1.2915; it rose 0.4% and fell 0.3% earlier; the pound fell 0.93% for the week, its first weekly decline in three weeks. The one-week implied volatility is about 10.34%, and this month’s high is at 12.14%, showing an increase in optimism.

Brad Bechtel foreign exchange strategist at Jefferies Group LLC, said that attention should be paid to this week’s low point close to 1.2860. If it falls below this threshold, it will look at 1.2836 on the 100-day moving average.

Tom Fitzpatrick, a chief foreign exchange technical strategist at Citigroup, suggested withdrawing short positions in the euro against the pound at 0.9088, before opening positions at the 0.9060 level on October 2.

He stated in an emailed report on Friday that the 0.9020 to 0.9025 support level “held at the close two days ago, and then rebounded sharply. As far as EU negotiations are concerned, the event risk seems to be rising.

The Euro Against the US dollar Has Exhausted Its Gains

EURO Currency

The research department of Credit Agricole Bank stated that it takes a neutral stance on the euro against the US dollar and expects the European Central Bank to further relax its monetary policy in the next few months.

The recent rally of the euro against the dollar has ended, the dollar is regaining some of its losses, while the euro remains under pressure against other major currencies such as the pound, yen, and Swiss franc.

In the near term, the focus will be on the Eurozone’s October PMI, which may reach the tipping point that will trigger the European Central Bank’s monetary policy meeting in October to further relax its monetary policy, which may further depress the euro.

According to Rabobank, if the UK and the EU reach a trade agreement, the pound will go higher, but given the political disharmony in the UK, the upside of the pound will be limited. Just as Scotland voted to stay in the EU, it is also likely to hold another referendum to leave the United Kingdom; in addition, British Prime Minister Johnson’s responsibilities in the fight against the epidemic also highlight the relationship between Scotland and England, Westminsters and northern England.

It is expected that the euro against the pound will fall from the current level of 0.9092 to 0.89 in the next three months, but there is little confidence that the pound will “recover too much vitality” in 2021.

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Benedict Kasigara

I have been working as a freelance editor/writer since 2006. My specialist subject is film and television having worked for over 10 years from 2005 during which time I was the editor of the BFI Film and Television.

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