Dollar Rate Today Report for 29/10: Have Currency Markets Had Their Fill on USD Selling?

• The pound to US dollar exchange rate is 0.36 pct down on last night's close at 1.6081.
• The euro to dollar exchange rate is 0.2 pct lower at 1.3760.
• The Australian dollar to US dollar exchange rate is 0.75 pct down at 0.9499.

It would appear that markets have, for now, had their fill of US dollar selling.

"The USD made a slight recovery yesterday despite relatively mixed output data in September and weak pending home sales data. While recent US data has been on the weak side, it has failed to provide further impetus to add to USD short positions which can explain why the USD downward momentum has faded since last week's September payrolls release," says a currency note issued by Lloyds Bank Research today.

Note: The above quotes are from the wholesale markets; your bank will subtract a discretionary spread from when passing on their retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering up to 5% more currency. Please learn more here.

So is this the end of the recent USD selloff?

Lloyds Bank argue that today could see fresh USD pressure: "Given the sharp decline in the Michigan survey, we view risk are to the downside to today’s conference board sentiment index. The market is currently forecasting a drop to 75.0."

However, for the US currency, the big event of the week comes tomorrow.

"The FOMC starts its two-day policy meeting today, and the expectations are undoubtedly dovish. The Fed is expected to continue purchasing USD 85bn in MBS and Treasuries per month. USD is slightly better bid since the week began; the 10-year treasury yields remain above 2.50%-key support," says Ipek Ozkardeskaya at Swissquote Research.

Lloyds say they think the USD will likely remain well supported ahead of tomorrow’s key releases; the FOMC announcement, CPI and ADP employment report.

ADP will be of particular interest as it will likely provide a clearer picture of the impact the government shutdown had on employment activity in October, given the quality of the US payrolls report will likely have been compromised due to the shutdown.