The euro peaked at $1.00935 and sterling at $1.1645 in early Asia trade, both their highest since September 13.
“But certainly near term, given how much was priced, we’ve seen a bit of retracement in the dollar … Our sense is that it’s a bit of a consolidation of the recent moves rather than extension of further dollar declines.” Housing data released this week, which showed that US single-family home prices sank in August and sales of new US single-family homes dropped in September, added to the case that the Fed’s aggressive tightening cycle is already working to slow the economy.
The main focus on Thursday will be a rate decision by the European Central Bank, with markets expecting it to deliver a 75 bp rate hike.“The question is whether they want to … show that full commmitment to the inflation mandate, or whether they show weakness or concerns in terms of what looks to be a challenging growth outlook.”