The dollar fell on Monday on waning fear of Euroepan natural gas shortages and extreme energy inflation this winter along with hopes that markets have priced in most of the remaining Fed rate hikes and anticipation that Tuesday's U.S. election might produce risk-supportive gridlock.
EUR/USD rose 0.6% after euro zone investor morale improved for the first time since August, largely due to the rapid filling of the region's natural gas storage facilities and unseasonably warm temperatures dousing energy demand nL8N3220GD.
French central bank governor Francois Villeroy de Galhau's hawkish comments Monday were somewhat supportive nF9N30F02C, as were hopes that China will attempt to make it's zero-Covid policies less disruptive nL4N31Z0X6, despite comments from Chinese officials largely to the contrary.
Sterling out-performed other majors, rising 1.1% on reports of robust fiscal tightening plans to be presented to Parliament on Nov.
17 nL8N3233K5, allowing the government to distance itself from the September mini-budget debacle that sent sterling to record lows and could reduce BoE tightening to damp inflation.
The BoE's 75bp hike on Thursday also lent policy credibility, but sterling must still break out above this year's downtrend that capped the last two week's rebounds, as well as the 100-DMA after Thursday's U.S. CPI report refreshes the Fed outlook.
USD/JPY fell 0.08%, with the haven dollar and yen both out of fashion amid better risk acceptance.
Threat of Japanese intervention and peak fed funds hopes encouraged IMM specs to book some long profits recently, but it might take a below-forecast U.S. CPI to weaken very supportive Treasury-JGB yield spreads.
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