Due to lessening economic gloom in the UK, sterling stayed close to a two-month high during the first week of November, while the dollar was weaker overall. In the coming week, traders will be watching for new economic indicators to predict where policy rates will go. A postponed OPEC+ meeting, data from the Federal Reserve’s preferred inflation measure, inflation readings in Australia and the euro zone, a rate announcement from the Reserve Bank of New Zealand (RBNZ), and Chinese PMI data are all on this week’s schedule.
After statistics last week indicated that British companies surprisingly recorded a slight return to growth in November after three months of decline, sterling was last seen down 0.06% at $1.2598, but it was still hovering around Friday’s almost two-month peak of $1.2615. With the help of a declining US dollar, the pound is expected to rise by around 3.7% this month, marking its biggest monthly increase in a year. In addition, the Australian dollar held close to a peak reached around three months ago, recently buying $0.6578, ahead of Wednesday’s domestic inflation report.
Against a basket of six peers, the US dollar stumbled close to its most recent two-month low as traders watched the U.S. core PCE prices, which are expected this week, for indications about the Fed’s future moves. With a recent increase of 0.08% to 103.51, the dollar index is on track to record its poorest performance in a year—a monthly loss of 3%. The CME FedWatch tool indicates that market pricing indicates a roughly 23 percent likelihood that the Fed may start relaxing monetary policy as early as next March.