We saw the US Dollar regain its strength on Friday, after European Central Bank (ECB) President Mario Draghi discussed extending and increasing Europe’s Quantitaive Easing (QE) programme. As the euro fell against the dollar, the American currency strengthened against a number of rivals – including sterling.
There were further gains for the dollar after the US Manufacturing Purchasing Managers’ Index (PMI) figures were released – at a higher rate than predicted of 54. This was followed by China cutting their interest rates, and this could demonstrate a slowdown in the economy and create a bullish influence towards the likelihood of the Federal Reserve’s decision to raise interest rates sooner rather than later.
This week we expect further movement caused by durable goods, consumer confidence and the release of the preliminary figures for third quarter US Gross Domestic Product (GDP). The GDP figures are expected to show contraction from the previous quarter and as such not supportive of an early increase in US interest rates.