USD Volatile on Fed Uncertainty, EUR Holds Firm on Mixed Data, GBP Slips on Weak PMIs and Fiscal Concerns.

USD:

The dollar is under some downward pressure right now. Mixed messages from Fed officials are creating uncertainty about how soon and how aggressively rate cuts may happen. The markets are also watching ahead toward the Fed’s preferred inflation gauge report (the PCE index) later in the week for clearer direction.

There are also political and fiscal risk. US budget negotiations and fears of government shutdowns are adding a risk premium that weakens sentiment in USD.

USD likely to remain volatile; any strong data (especially inflation, jobs) could flip sentiment quickly.

EUR: 

In the Eurozone, recent PMI data has been mixed: manufacturing is weak but services are holding up better than expected. That helps limit downside pressure.

Comments from ECB officials like Joachim Nagel have tried to dampen concerns about euro strength hurting exports. That suggests the ECB is watching the currency moves but hasn’t given indication of aggressive intervention.

There is some resistance just above current levels; upside seems limited unless more positive surprises emerge from US inflation or weak USD-signals for EUR/USD.

GBP:

GBP is under pressure today. UK’s flash PMIs (manufacturing and services) disappointed. Manufacturing is contracting whilst services have slowed sharply.

There are also rising concerns about UK public finances: borrowing is higher than expected as it totalled 83.3bn between April and August which is 11.4bn more than forecast. This opens the door to a painful budget on November 26th as the government will need to make up for this figure.

The GBP/EUR currently sits at the lowest levels since November 2023.

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