USD

The dollar gained a bit on the news that the Senate and Congress were able to pass the bill on extending the debt ceiling deadline but lost ground later on when risk appetite took over the markets. 

It didn’t help the Greenback’s cause that Dagong, a Chinese rating agency, downgraded U.S. debt from A to A- and triggered a strong dollar selloff towards the London session. Data from the U.S. was stronger than expected as the Philly Fed index showed a smaller than expected decline. No reports are up for release today but several FOMC officials are set to give speeches. 

EUR

The euro turned out to be a big winner yesterday despite the weak current account balance. Instead of widening to 17.7 billion EUR, the surplus came short at 17.4 billion EUR. The euro was boosted by risk appetite and lack of demand for dollars, after the U.S. got doled a debt downgrade by a Chinese rating firm. There are no reports due from the euro zone today so euro trading might be dependent on risk sentiment. 

GBP

The pound was lifted by strong U.K. data and upbeat risk sentiment in yesterday’s trading. U.K. retail sales posted a stronger than estimated increase of 0.6% versus 0.5% and the previous month saw an upward revision from -0.9% to -0.8%. For today, there are no reports due from the U.K. so pound trading could be sensitive to risk flows and possible profit-taking. 

JPY

The yen was victim to the run in risk appetite yesterday after the U.S. declared that the government shutdown is over. There were no reports released from Japan then and there are no reports due today, which means that the yen might continue to lose ground if risk appetite stays strong until the end of this trading week. 

CHF

The franc was able to bounce back against the Greenback yesterday, as the USD/CHF pair fell from the .9180 area to a low of .9020. There were no reports released from Switzerland, as the move was purely a result of dollar weakness on the heels of strong risk appetite and the U.S. debt rating downgrade. There are no reports due from Switzerland today so the franc might be sensitive to risk sentiment again. 

Commodity Currencies (AUD, NZD, CAD)

The comdolls extended their wins against the U.S. dollar when risk appetite surged yesterday. Australia’s NAB business confidence printed an improvement for the third quarter of the year but Canada’s foreign securities purchases report showed a weaker than expected result. Earlier today, Chinese GDP came in line with consensus at 7.8% and so did the industrial production figure at 10.2%. However, retail sales was weaker than expected at 13.3% versus the estimate at 13.6%. Canadian CPI is up for release in today’s US session and a 0.2% increase in core inflation is expected. 

By Kate Curtis from Trader’s Way