US Dollar Ends Week Strong, Commodity Currencies Outperform

The US dollar ended the week relatively strong against most other major currencies thanks to the hawkish minutes of the Federal Reserve. Yet commodity currencies, including the Australian and New Zealand dollars but excluding the Canadian dollar, outperformed the greenback.
The minutes of the Fed policy meeting in September revealed that the Committee members voted for an interest rate hike unanimously. That led to speculations about the Fed hiking rates one more time this year, and such outlook was beneficial to the US currency.
The euro was soft due to concerns about the clash between Italy and the European Union over the Italian budget, though the currency recovered somewhat by the weekend as European politicians expressed desire to avoid confrontation. The Great Britain pound initially rose on hopes for a trade deal between the United Kingdom and the EU, but the sterling fell later after no progress in trade negotiations was apparent and Britain’s inflation missed expectations.
As for commodity currencies, market analysts explained the rally of the Australian dollar by rising prices for iron ore. Meanwhile, the New Zealand dollar got a significant boost from the better-than-expected inflation print.
The Canadian dollar did not join the rally of other commodity currencies due to negative macroeconomic reports released on Friday. The Consumer Price Index fell 0.4% in September from August (not seasonally adjusted), whereas analysts had expected an increase by 0.1%. Retail sales fell 0.1% in August versus the consensus forecast of a 0.3% increase.
EUR/USD edged down from 1.1539 to 1.1512. NZD/USD climbed from 0.6500 to 0.6589 over the week. USD/CAD advanced from 1.3015 to 1.3095, bouncing from the weekly low of 1.2916.

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