USD extended gains further as stocks dropped and political jitters ahead of the upcoming elections pushed treasury yields higher.
Fed speakers Logan, Kashkari and Schmid all struck a cautious tone on the pace of future rate cuts also supporting USD.
*Daily move - against G10 rates at 7:30am, 22.10.24
** Indicative rates - interbank rates at 7:30am, 22.10.24
We are expecting to hear from a substantial number of speakers from the ECB and BoE today, however primary focus is going to be on Governor Bailey's speech at 2.25pm - his first of four upcoming speeches this week. As mentioned yesterday, any dovish tones from the governor will likely put pressure on GBP as markets could add to BoE rate cut bets.
Goldman Sachs is projecting that interest rates will fall to 2.75% by next Autumn - a stark contrast to markets' forecast of 3.75% for the same period. Nonetheless, both forecasts illustrates the point that markets are underestimating the extent of rate cuts the BoE could implement.
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