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Two main developments drove the foreign exchange market in October. First, the market grew more confident that a hard Brexit could be avoided. This drove sterling sharply higher. It rallied from $1.22 on October 10 to a little above $1.30 on October 21 before doubts grew about the likelihood that Parliament will approve the new agreement. The other development was a heavier US dollar after strong gains over the past three months. The prospect that the US-China tariff truce could be solidified with an agreement between Trump and Xi in November may have encouraged some risk-taking. US September economic data consistently was disappointing, but Q3 GDP was a little firmer than expected, and the October employment data was a bit better than expected. .The dollar fell against all the major currencies in October, except the Norwegian krone. The dollar barely missed rising against the yen. After hovering around JPY109 for much of the second half of October, volatility around the FOMC meeting (October 30) lifted it to nearly a three-month high of almost JPY109.30. The dollar reversed to fall dip below JPY108.00 on the last day of October. The krone’s weakness is harder to square with the Norges Bank’s […]
