The U.S. Dollar is trading in mostly familiar ranges, tilting down across some Major currencies, especially Euro.
Overview
This week looks to be characterized by political risks. The U.S. has its first Presidential debate on Thursday, a similar one for Rishi Sunak in the U.K. on Wednesday, and congressional elections in France on Sunday. The Buck could be driven in a mixed direction as the week moves along. Per the Bloomberg Dollar Spot Index, the greenback has had a streak of improvement for five weeks straight.
The next days will all be a countdown to core Personal Consumption Expenditures on Friday, which, if soft, could trigger a rally against the USD as chances of an interest-rate cut by the Fed will likely increase. Odds for a move in September are now at 63.0%. In terms of data, PCE Friday will be accompanied by releases of Spending, Income as well as Consumer Sentiment. The University of Michigan’s survey results will be on Friday, and the U.S. Conference Board Consumer Confidence is due out tomorrow.
What to Watch Today…
- US Conference Board Confidence Tuesday
- Banxico Meeting Thursday
- PCE Inflation figure Friday
- Monex USA Online is always open.
EUR ⇑
The Euro climbed this morning as news broke that EU leaders will sit down with Chinese counterparts to work out some trade and tariff issues. In pushing for greener technology, the Europeans had hoped to develop their own manufacturing activity around it, but now see themselves unable to compete with China. As a result, recent talks among EU leadership have centered on discouraging Chinese business but are now also coping with the potential of devastating retaliation from China. Like the U.S., the EU wants to decouple itself from China, but it lacks the leverage. It is seen as a good sign that the two parties will try to mend differences and not put EU economic prosperity in peril.
MXN ⇑
The Mexican Peso has been at its best level since the beginning of June, as last week proved to be one of less political nervousness and more focus on fundamentals. Mexico remains a place for foreign investment and rerouting U.S. interests after the fallout with the Chinese over post-pandemic measures and support for Russia. Furthermore, central bankers could add to the Peso recovery with Thursday’s Banxico meeting if it results in yet another paused on the path towards cutting borrowing costs. The Bi-Weekly Consumer Price Index this morning showed that there is a slowdown in disinflation.
