The dollar was strong against the pound yesterday, benefitting from sterling’s weakness, but was low against the euro. It is weak against both currencies this morning ahead of the FOMC minutes.
Data released yesterday showed that inflation in US has unexpectedly decelerated. The latest PPI series showed that the year-on-year inflation in the country slowed to 1.4% in September, down from 1.8% in August. This possibly increases the chances of an interest rate cut from the Federal Reserve later this month.
In his speech yesterday, Fed Chairman Jerome Powell said that the Federal Reserve will continue to monitor the economic climate when deciding whether to cut interest rates again later this month. He stressed that “policy is not on a preset course” and also explained that the Fed will expand its balance sheet, in order to keep an ample supply of banking reserves in the financial system. FOMC minutes will be released later today, which are likely to give us an idea of the Fed’s approach.
Meanwhile, in US-China trade news, China has ‘strongly urged’ the US to stay clear of the country’d domestic issues, after the US blacklisted several Chinese companies due to alleged human rights violations against Muslim minorities.
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