The U.S. Dollar is trading in stronger ranges this morning as markets digest a variety of risk items that are still favoring its surge.
Overview
China’s troubles remain a constant reminder that the world’s second-largest economy has taken such a hit post-pandemic that faith across investors is that they may struggle with vehicles of financial alleviation. The meeting between China and other leaders from BRICS, the group of nations hoping to gain influence as their impact on the global economy emerges, did produce a gain in the MSCI Emerging Markets Index for stocks while also aiding ZAR, INR, and BRL primarily within the MSCI EM Currency Index. They want more technological and trade integration while still moving the globe’s raw materials.
While EM and LATAM currencies stay afloat, the majors have lost ground once again on doubts that their central banks will be able to keep borrowing costs at record highs. The worst performers against the buck are GBP, JPY, and the “Antipodean” currencies down under.
As equities rejoice from news of A.I. improving the business of microchips and other needed instruments as NVIDIA is impressed with its earnings, watch out for any “dovishness” to come from the Jackson Hole Symposium. Per early reports, there are some concerns among financial leaders about the strength of economic activity. Earlier, the release of July Durable Goods Orders showed a deeper contraction reading at (-5.2%) vs. (-4.0%). Nevertheless, Labor is still steady, with Initial Jobless Claims coming in under the estimate. Statements tomorrow will be key to deciphering guidance from all these contractions.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
EUR ⇓
The Euro has stayed around its weakest levels since mid-June as data keeps providing negativity for the outlook for the remainder of the year. As financial heads meet in Wyoming, expect their words to affect market moods and give a better indication of where rate increases or cuts are going. The Purchasing Managers Index figures yesterday solidified the fact that Europe, in general, is struggling to expand while Confidence surveys are even more pessimistic than economists thought. Gross Domestic Product for the second quarter comes out of Germany tomorrow, and the expectation is to avoid a recession coming in at 0.0% after a (-0.6%) back in Q1. The Euro will be very volatile as we close the week.
MXN ⇓
The Mexican Peso has escaped losses this week, unlike most of its peers, thus far having improved by 1.3% against the greenback. Although Mexico is not a member of BRCIS and, in fact, very interdependent with its continental partners as a member of the revamped “NAFTA” agreement, it is worth pointing out that MXN is among the commodity-based currencies truly gaining while other majors dwindle. Emerging and developing markets have seen less contractionary effects post-pandemic-re-opening, and it has helped in depreciating the buck some.
