With the US and EU GDP outlooks diverging, the dollar rises and the euro falls

25 Oct 2023 , 10:10 AM

Due to a deteriorating picture for the bloc’s development, the euro struggled to gain traction on Wednesday, while the dollar was strong thanks to yet another strong reading of U.S. economic data.

In a first knee-jerk response to Wednesday’s higher-than-expected inflation reading in Australia, the Australian dollar gained more than 0.5%.

Data released on Tuesday indicated that although company activity in the eurozone unexpectedly declined this month, U.S. corporate production increased slightly in October as the manufacturing sector emerged from a five-month contraction.

After falling 0.75% on Tuesday, the euro was last trading 0.05% higher against the dollar at $1.0595.

The dollar index rose as a result of the single currency’s decline, and it most recently stabilized at 106.23, moving away from the previous session’s one-month low of 105.35.

The dollar index compares the value of the US dollar to a basket of six other currencies, with the euro being the most heavily weighted currency.

With the Japanese currency last trading at 149.86 per dollar after largely moving sideways during the previous month, the rising dollar kept the yen trapped close to the eagerly anticipated 150 mark and kept traders alert for any indications of Japanese government intervention.

As global interest rates climb, pressure is building on the Bank of Japan to alter its bond yield control policy. In the lead-up to next week’s policy meeting, a rise to the current yield cap, which was established just three months ago, is being considered as a possibility, sources reported earlier this week.

In other news, the New Zealand dollar increased by 0.08% to $0.5849, while sterling increased by 0.04% to $1.2165.

At $0.6378, the Australian dollar last saw a 0.35% increase.

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