The U.S. dollar has weakened to its weakest overall level since the end of May, according to the Bloomberg Dollar Spot Index.
Overview
Markets are weighing the pros and cons to arrive if, indeed, former President Donald Trump gets a second term in the Oval Office. After some statements directly addressing the dollar, Trump stated that it is imperative to have a weaker currency in order to compete with Chinese and Japanese exports. With his growing popularity, traders and investors are preparing themselves for items to come with a Trump agenda and taking seriously all considerations for changes that will surely affect trade.
Expect a lot of talk about China for the remainder of the week as the Biden administration is also proposing major restrictions on semiconductor and technology trading. Domestically, Housing starts, Mortgage Applications, and Building Permits all came in better than expected for June. There will be other data to chew tomorrow in the form of Jobless Claims and Manufacturing. Fed members will be speaking in the next few days, likely with the need to answer questions about Fed policy if a change of the guard comes in November.
What to Watch Today…
- ECB Meeting Thursday
- Monex USA Online is always open.
JPY ⇑
The Japanese Yen climbed to its strongest value against the Buck since the start of June after comments about a potential currency war to come down the line. Additionally, it is playing a safe-haven role as technology shares tumbled across exchanges based on very anti-China stance vibes from the U.S. that could put manufacturing and trade of essential materials at the peril of becoming more challenging. The Bank of Japan will meet on July 31st with odds for a hike at 46.0%. Any will by officials to increase rates as the year progresses may give room for the Yen to flourish further.
GBP ⇑
Sterling climbed to its best level in a year over the dollar after inflationary gauges showed that price growth has not been dented. Consumer Price Index figures have advanced in the past two months and the yearly average has gone from 1.9% to 2.0%. Retail Prices were also confirmed to rise, now averaging an annual 2.9%. As inflation stays stubborn, it gives the Bank of England the ability to withhold any interest rate cuts. Chances for a reduction in borrowing costs are down to 37.0% for the BOE’s August 1st decision announcement.
