The U.S. Dollar is trading in weaker ranges across the board with increased expectations that the Federal Reserve will be cutting interest rates next month.
Overview
Equities went up as investors foresee financial easing coming down the line following economic data suggesting that prices remain growing, but very slowly, and that growth concerns need to be addressed. S&P 500 Index closed at a record high while treasury note yields have declined. The exchange has advanced 10.0% for the year with most gains achieved in the past two months after a major rebound for stocks following being upended in April.
Commentary from Treasury Secretary Scott Bessent suggesting that we should see aggressive cuts in the near future while the Federal Reserve faces some scrutiny over its governance, has also affected the Buck as well. A newly appointed head of the Bureau of Labor Statistics also raised eyebrows by explaining that reporting on monthly labor developments may change. Overall, the idea that economic data and policymaking can be interfered with does not bode well for Dollar value and perception of stability. Without any major data until tomorrow, the day’s moves will be dictated by headlines and further reaction to commentary from financial authority figures.
What to Watch This Week…
- U.S. PPI Thursday 8:30AM
- U.S. Retail Sales, Friday 8:30AM
- University of Michigan Consumer Sentiment Friday 10AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇑
The Euro is climbing and has reached its best level in over three weeks as the narrative has switched negative for the Buck as monetary policy seems to be headed towards “dovishness.” We shall see if data on the other side of the pond makes a dent in the progress of the shared currency. In Q1, it was a welcome surprise that the euro-zone managed to climb out of contractionary pressures but a flat, if not dwindling, Q2 is making a case for the European Central Bank to return to being more stimulus-driven. They will meet in about a month on September 11th. Current benchmark rate stands at 2.15%.
MXN ⇑
The Mexican Peso remains on the strengthening side over the Buck as concern grows over “stagflation” in the U.S. As discussed in other updates, MXN has benefitted from a good relationship between Mexico’s President Claudia Sheinbaum and the White House, which yesterday announced a deal handing over wanted criminals to the U.S. thus further improving the cooperation in combatting crime between the two neighboring nations. We shall see if the mood continues to be boosting other tender and if the Dollar will erase all it recovered when it appreciated throughout July.
