The U.S. Dollar is trading in familiar ranges, with flows overnight staying mostly muted after an eventful week revealing some guidance into the future with an outlook predicting “stagflation.”
Overview
Ongoing inflation in the U.S., along with expanding economic indicators, has boosted the buck against currencies from the other side of the Atlantic, such as the Euro and Sterling. Meanwhile, U.K. and European figures have dialed up concern over the long-term picture ahead of a winter where energy costs could be a major challenge to already contractionary trends for the continent.
On the other hand, renewed optimism over China after some economic indicators pointed at recovery. The stimulus helped in improving Consumer Spending, Factory Output, Industrial production, as well as Retail Sales. Pro-growth measures have improved other tender, and overall, the Buck is currently down almost half a percent for the week. The mixed bag of world economic dynamics has led central banks, such as the European Central Bank, to admit that fighting inflation may be done for now while there is a focus on growth and stability. The dollar’s current situation still represents a 14.0% decline from a year ago when the currency hit all-time records.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
EUR ⇑
The Euro tumbled to begin the week as it has lost a lot of shine based on underwhelming economic data that has central bankers downwardly revising their forecasts. Stagflation, the economic phenomenon of ongoing price growth with low or no Gross Domestic Product growth, is basically where the mindset of ECB officials is based on a summer that witnessed nations such as the Netherlands dip into recession and Germany demonstrate an inability to meet the tough task of handling being the diplomatic and productivity engine for the Euro-zone.
A missed opportunity to aid Ukraine as promised initially has left the country with more political infighting as well as firms shocked over China’s friendliness with Putin. For now, the shared currency seems at the mercy of weather, which diminishes the need for expensive oil and other energy sources. Hikes to the benchmark interest rate may be paused for quite a while.
MXN ⇑
The Mexican Peso improved by 2.9% since last Friday after economic vibes from the neighboring and top trading partner revealed better times than other regions. Industrial Production in July was robust for Mexico, while spending and investment in other areas like Eurasia business confidence is waning. A volatile Peso will be common as we close out a year that established a closer interdependence with U.S. production lines but faces questions over the government’s moves as a general election in 2024 approaches. For now, Peso appreciation is merited.
