During the Asian session on Monday, the U.S. dollar gained strength against other major currencies, driven by reduced liquidity due to a Japanese holiday and the market’s focus on China’s disappointing weekend stimulus efforts.
This weekend, China’s finance ministry highlighted the potential for increased fiscal stimulus, although it omitted important specifics regarding the overall size of the initiative. In addition, consumer inflation in China unexpectedly decreased in September, while producer price deflation intensified, raising alarms about weak domestic demand.
Traders reacted to a report indicating that U.S. producer prices remained unexpectedly unchanged in September, fostering optimism that the U.S. Federal Reserve will persist in lowering interest rates in the upcoming months, despite diminishing hopes for another 50-basis point cut next month.
“Following an upside surprise from the September CPI report, the producer prices fell short of expectations, bolstering support for a 25bps rate cut in November,” commented Matthew Martin, a Senior U.S. Economist at Oxford Economics.
Crude oil prices experienced a slight pullback after significant gains in the previous session. For November delivery, West Texas Intermediate crude fell by $0.29 or 0.4 percent to $75.56 a barrel. Although there was a decline today, crude oil prices rose by 1.6 percent over the week.
In today’s Asian trading, the U.S. dollar reached 4-day peaks of 1.0915 against the euro, 149.37 against the yen, and 0.8587 against the Swiss franc, compared to Friday’s closing values of 1.0937, 149.13, and 0.8570, respectively. The greenback may face resistance at approximately 1.08 against the euro, 154.00 against the yen, and 0.87 against the franc.
Against the British pound, the greenback increased to 1.3041, up from Friday’s closing price of 1.3066, with 1.29 seen as the next resistance level for the dollar.
Against the Australian and New Zealand dollars, the dollar also climbed to 4-day highs of 0.6722 and 0.6082 from last week’s closing values of 0.6750 and 0.6109, respectively. Should the greenback continue its upward trend, potential resistance levels are likely around 0.66 against the Aussie and 0.59 against the Kiwi.
The dollar surged to nearly a 2-1/2-month high of 1.3789 against the Canadian dollar, up from Friday’s closing value of 1.3762. The next potential target for the greenback is around the 1.39 region.
Looking ahead, the U.S. NY Fed 1-Year Consumer Inflation Expectations for September will be released during the New York session.
Canadian markets will remain closed in observance of the Thanksgiving holiday.
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