The U.S. Dollar is trading in favorable ranges across the board to start a Wednesday without any data to chew.
Overview
Nevertheless, central bank action knows no breaks and a new member has joined the global “dovish” pivot towards stimulating economies and slashing borrowing costs as part of that effort. Sweden’s Riksbank chose to cut into its interest rates by 25 basis points, thus becoming the second largest European financial authority to do so after the Swiss National Bank acted in March. The development has helped make this the third consecutive day of buck strengthening overall.
Furthermore, Fed Bank of Minneapolis President Neel Kashkari explained in commentary yesterday that the Fed needs to remain in a restrictive mode in order to pressure inflation downward. The higher-for-longer theme could continue tomorrow as we get the Bank of England’s decision.
As far as domestic figures go, not much is left on the horizon for the rest of the week, with Thursday’s Jobless Claims and Friday’s University of Michigan Consumer Sentiment on Friday worth watching on the schedule. Chinese trade numbers could also be dented tomorrow, particularly influencing EM-currencies. Those recently have experienced a bump since the start of the month, with the MSCI emerging market Currency Index improved by over half a percent since then.
What to Watch Today…
- BOE & Banxico tomorrow
- University of Michigan Consumer Sentiment Friday 10AM
- Monex USA Online is always open.
MXN ⇓
The Mexican Peso has climbed by 1.0% in value over the Buck ever since May started, propelled by growing doubts over the American economy revealing some signs of stagnation. While Mexico also dealt with a Q1 defined by a slowdown as the yearly pace of growth tumbled from 2.3% to 1.6%, the country remains in a more positive situation than other regions and next to the U.S., which keeps the Peso look attractive. Banxico’s policy decision tomorrow will be crucial in establishing if the central bank is convinced that continuing to slash interest rates will prevent a deterioration of GDP. We will know around 2 PM.
GBP ⇓
Sterling is moving around its weakest level in over two weeks ahead of tomorrow’s key moment as the Bank of England talks policy. While no cuts are expected tomorrow, the questioning on Governor Andrew Bailey will be all about figuring out if there will be a “dovish” change along with the European Central Bank by June. Odds that BOE makes a slash in August have gone up to above 50.0%.
