- EUR / USD is down for the second day in a row, thanks to the strength of the US dollar.
- The US Dollar Index is trading at a year-and-a-half highs above 94.50, weighing on the EUR / USD pair.
- Market sentiment is pessimistic, attributed to inflationary pressures and slower growth.
- The Fed’s Bostic and Clarida support the start of the bond phasing in November.
The EUR/USD it falls during the American session, losing 0.23%, trading at 1.1526 at the time of writing. The single currency is trading near the lows of 2021.
Market sentiment remains in risk aversion mode, represented by US stock indices falling between 0.15% and 0.34%. However, safe-haven currencies like the Japanese yen and the Swiss franc are losing to most G8 currencies. Meanwhile, the US dollar index, which tracks the performance of the dollar against a basket of six rivals, is up 0.18%, trading at 94.54, reaching a new high of 1 and a half years.
Factors such as inflationary pressures driven mainly by high energy prices, supply shortages and a drop in consumer confidence keep investors in check.
The ZEW of economic confidence in Germany was worse than expected
On the macroeconomic front, Germany presented the Economic Sentiment and the current situation from the October ZEW Survey. German economic sentiment rose to 22.3 below the 24 forecast, while the current situation reading rose to 21.6, worse than the 29.5 expected, and lagged behind September 31.9.
On the other hand, JOLTS job offers for August were reduced to 10,439 million, less than the estimated 10,925 million.
Bostic and Clarida of the Fed support the start of the reduction of bonds for the November meeting
Members of the Fed made statements during the session. Raphael Bostic, chairman of the Federal Reserve in Atlanta, said the slowdown in the US labor market should not derail the Fed’s downsizing schedule. He added, “It would be comfortable to start cutting the asset purchase program in November.”
Meanwhile, Federal Reserve Vice Chairman Richard Clarida said the tune-up bar has all but been met when it comes to the job market. He further added, “if the recovery is ongoing, a gradual reduction in asset purchases will soon be justified to conclude in the middle of next year.”