Dollar rises as Middle East tensions intensify

Market reports
Lawrence Kaplin
  • GBP: 2-week low versus EUR
  • EUR: Inflation falls
  • USD: Gains on safe-haven flows
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Currency markets continued to trade in a fairly tight range as traders watch for further developments in the Middle East. The dollar rose modestly yesterday as safe haven demand increased following Biden’s visit to Israel where he reiterated “we will continue to have Israel’s back.”

Yesterday’s hotter than forecast UK inflation data had little effect on the pound, as markets continue to focus on geo-political events.

The US central bank released its latest Beige Book yesterday evening, which maintained that US economic activity was little changed, prices to continue to increase at a modest pace, tightness in the labour market continued to ease, and there was little change in economic activity.


Market rates

* Daily move - against G10 rates at 7:30am, 19.10.23

** Indicative rates - interbank rates at 7:30am, 19.10.23

Data points


  • USD: Fed Powell, Jefferson, Goolsbee, Barr, Bostic, Harker  

Our thoughts

The underlying strength of the US economy has seen the dollar climb over 7% since July, and added over 1.2% to the benchmark US 10-year treasury bonds as economic activity continues to outperform expectations.

This evening US Federal Reserve Chair Powell is slated to deliver a key speech on the economy ahead of the upcoming rate setting meeting due November 1st. This may temporarily switch the market’s focus back to macro-economics as we expect him to maintain the Fed’s “higher for longer” stance on interest rates.

With the central bank about to go into a 2-week media blackout ahead of the meeting, there is a slew of Fed speakers slated to speak later today where we expect the consensus opinion to be in line with Fed Chair Powell.

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