The US dollar lost a number of positions against the European currency and the British pound at the end of trading on Friday, when many traders hastened to lock in profit on short positions in risky assets, after their major fall at the end of the week.
Demand for the US dollar also slightly cooled after the release of a report, which indicated that consumer confidence in the US in October of this year had dropped slightly.
Despite the fact that households positively assessed the prospects for the economy, the final index of consumer sentiment at the University of Michigan in October 2017 dropped to 100.7 points against the preliminary rate of 101.1 points. However, compared with September, the index rose by 5.9%, when it was 95.1 points. Compared to October 2016, the index grew by 15.5%. Economists had expected the index to be 100.8 points.
Political events that occurred this weekend, did not affect the rate of the European currency. As early as Friday in Catalonia, the local parliament declared independence, and the central authorities of Spain dissolved it.
Yesterday in Barcelona, there was a mass demonstration, which gathered nearly 1.3 million people. The demonstration was organized by opponents of the independence of the Catalan region. Given the lack of important fundamental data during the first half of the day, most likely most of the attention of investors and traders will be focused precisely on the collision of parallel institutions of power in Spain and Catalonia, which will begin today. Any deterioration in the situation could negatively affect the rates of the European currency, which will continue its decline against the US dollar and a number of other currencies.
This week, it is also expected that President Donald Trump will nominate current member of the Federal Reserve Board of Governors, Jerome Powell, as head of the central bank. However, so far more detailed information from official sources has not been received.
This Wednesday, the next meeting of the Federal Open Market Committee of the Federal Reserve will take place, to which a decision will be made on the base interest rate, which, in all likelihood, remains unchanged. More interesting will be the statements of the head of the Federal Reserve, Janet Yellen, concerning the economic recovery after the hurricanes.
On Thursday, the Bank of England may, for the first time since July 2007, increase the key interest rate. According to economists' forecasts, and taking into account the latest fundamental data on GDP and inflation, the bank will raise the key interest rate by 25 basis points, to 0.50%, which will certainly support the British pound, which at the end of last week again fell sharply against the US dollar.
