Euro gains 0.42% to 1.1253 on the dollar; sterling gains 0.45% on the euro
ECB reference rates show the euro, sterling and the yen firmer against the dollar from Oct. 9 to Oct. 16; Reuters had the dollar index heading for a 0.45% fall.
- The euro rose 0.42% against the dollar to 1.1253 between Oct. 9 and Oct. 16, our calculation from ECB reference rates.
- The dollar index was set for a 0.45% weekly fall on Oct. 16, according to Reuters, despite 3.7% US inflation.
- The Federal Reserve announces its next rate decision on Oct. 28, after raising its target range to 3.75%-4.00%.
The euro gained 0.42% against the dollar from Oct. 9 to Oct. 16, our calculation from European Central Bank reference rates, as Reuters reported the dollar index heading for a 0.45% weekly fall in the week of Oct. 12-18.
The dollar index is set for a 0.45% weekly fall despite hotter US inflation
Reuters reported on Oct. 16 that the dollar index, which tracks the dollar against six major peers, fell 0.25% to 101.77 and was set for a 0.45% weekly decline.
The report was published at 7:51 a.m. EDT, so the levels are intraday, not closes.
US consumer prices rose 3.7% in the 12 months to September, the Bureau of Labor Statistics said on Oct. 14. Reuters said Treasury yields dropped despite hot inflation readings as cautious Fed remarks tempered hike expectations.
Markets assigned an 87% probability to the Federal Reserve keeping rates unchanged later in October, according to the CME FedWatch tool cited by Reuters via BNN Bloomberg.
That is market pricing, not a Fed commitment. The Fed's last decision was a 0.25 percentage point increase to 3.75%-4.00% on Sept. 16, the Fed said.
The euro gains 0.42% on the dollar and loses 0.45% to sterling
The ECB reference rate for the euro was 1.1253 dollars on Oct. 16, against 1.1206 on Oct. 9. That is a rise of 0.42%, our calculation: 1.1253 / 1.1206 - 1.
Against sterling, the euro fell to 0.84385 pounds from 0.84763, according to the ECB's sterling series. That is a fall of 0.45%, our calculation: 0.84385 / 0.84763 - 1.
The European Central Bank raised its key interest rates by 25 basis points on Sept. 10, before the week under review.
Combining the two rates implies sterling at 1.3335 dollars on Oct. 16, up 0.87% from 1.3220 on Oct. 9, our calculation: 1.1253 / 0.84385 against 1.1206 / 0.84763.
The yen and the Swiss franc gain as AI stocks sell off
The ECB's yen series shows 177.82 yen per euro on Oct. 16 and 177.34 on Oct. 9. The implied rate is 158.02 yen per dollar, down 0.15% from 158.25, our calculation: 177.82 / 1.1253 against 177.34 / 1.1206.
Reuters said the yen was on track for a 0.28% weekly rise and the Swiss franc for a 0.61% rise, calling the franc the biggest beneficiary of its safe-haven status.
Bank of Japan Governor Kazuo Ueda said on Oct. 16 that the bank would keep raising policy rates in line with economic and financial developments, Reuters reported.
Reuters said AI stocks fell sharply in the week and that the dollar did not draw safe-haven demand during the selloff.
A soft jobs report cuts Australian rate bets and the Aussie falls 0.3%
The Australian dollar rose 0.55% to $0.6959 on Oct. 16 but was on course for a weekly fall of 0.3%, Reuters said. A surprisingly soft jobs report had markets paring back bets on another rate increase.
The Reserve Bank of Australia raised its rate by 25 basis points to 4.60% in September, according to Newsquawk.
Strategists tie the dollar to AI spending and short-term rates
Macquarie strategist Thierry Wizman told Reuters that a reduction in the outlook for AI investment could threaten the dollar and lower US yields in the next few months, by cutting bond supply and weighing on US growth.
ING strategist Chris Turner said the dollar should consolidate near recent highs unless AI stocks fall again, according to Reuters on Oct. 16.
That is a forecast, not a result. The dollar index stood at 101.77 on Oct. 16, with a 0.45% weekly fall in prospect.
The week in numbers
| Pair | Rate Oct. 16 | Week change | Source |
|---|---|---|---|
| EUR/USD (dollars per euro) | 1.1253 | +0.42% our calculation | ECB |
| EUR/GBP (pounds per euro) | 0.84385 | -0.45% our calculation | ECB |
| EUR/JPY (yen per euro) | 177.82 | +0.27% our calculation | ECB |
| USD/JPY (implied) | 158.02 | -0.15% our calculation | ECB cross rate |
| GBP/USD (implied) | 1.3335 | +0.87% our calculation | ECB cross rate |
| Dollar index (intraday) | 101.77 | -0.45% Reuters estimate | Reuters via BNN Bloomberg |
As of Oct. 16. ECB reference rates are fixings published each working day; week change compares Oct. 16 with Oct. 9. The dollar index level is an intraday quote.
Central bank dates and flash PMIs set the tone from Oct. 19 to Oct. 28
- Oct. 20: UK jobs data and China's loan prime rate, which Newsquawk says is expected to hold at 3.00% for one year.
- Oct. 21: UK September inflation; Newsquawk lists consensus at 3.4% year on year, against 3.1% before.
- Oct. 22: Bank of Korea and Turkish central bank decisions, per Newsquawk's calendar.
- Oct. 23: flash October PMIs for the euro area, the UK and the US, and Japan's September inflation.
- Oct. 28: the Fed announces its decision at 2:00 p.m. ET, according to the Fed's calendar.
How we reported this: We opened the ECB rate pages, the Reuters report on BNN Bloomberg, the BLS release and the Fed statement. Weekly changes are our calculation from ECB fixings, not closes. Reuters levels are intraday.
Source: www.ecb.europa.eu