USD holds firm ahead of Retail Sales and IP data – Scotiabank

The US Dollar retains a firm undertone. All eyes are on the Fed decision tomorrow because there is not much in terms of fresh news driving the USD forward on the session, Scotiabank’s Chief FX Strategist Shaun Osborne notes.  

Focus on the Fed on Wednesday

“Markets have eyes on the Fed decision tomorrow and there is not much in terms of fresh news driving the USD forward on the session. US equity futures are a little softer while US Treasury yields continue to grind higher, with the 10Y yield reaching 4.42%, the highest in a little over three weeks. Higher yields and widening spreads are supportive of the broadly firmer tone in the USD.”

“So far today, the JPY and GBP are minor outperformers, however, while commodity FX is underperforming again. Bloomberg’s Asia dollar index, measuring the performance of the main regional currencies against the USD, dropped to a two-year low today and is heading for its worst quarterly performance in more than two years. Tariff concerns are weighing on the CNY’s performance while domestic political developments have undercut the KRW.”

“Asian regional currency softness is spilling over onto the AUD and NZD to some extent. The US reports Retail Sales (expected to rise 0.6%) and Industrial Production (0.3%) in November. A solid rise in retail activity is liable to bolster US yields and extend the USD a little more support.”