The United States Dollar finds itself in the familiar mixed territory this morning in volatile overnight trading.
Overview
Most – but not all – of Tuesday’s gains have been undone as stocks rallied ahead of tomorrow morning’s quarterly Gross Domestic Product reading. Expected to show mild growth, this may give the Federal Reserve the final signal they need to hike interest rates for potentially the last time this cycle next week. This morning, durable goods orders posted a surprising gain, but non-defense capital goods orders (excluding aircraft) fell, muddying the waters.
Uncertainty across the broader US economy continues to drive prices of the Buck. Action inside the G10 is divergent, with European currencies recovering while Antipodeans and commodity-driven currencies taking heavy hits. Even as equities rise this morning and earnings releases continue, signs tentatively point to a US recession later this year.
Beleaguered lender First Republic Bank’s stock price posted a dramatic loss in trading yesterday amid news it lost approximately 40% of its deposits over the last month – a sign of continuing instability in the financial sector. The battle over the federal debt ceiling continues as well, with Treasury Secretary Janet Yellen warning of “economic catastrophe” if a deal is not reached.
USD will likely remain range-bound over the next few days while the Fed’s media blackout continues before next week’s slew of central bank meetings.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
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EUR ⇑
The single currency fully recovered from fairly heavy losses taken yesterday in the Asian trading session overnight and started the morning with a 2/3% gain from close yesterday. As the outperformer of the G10 this morning, it appears markets are still weighing the possibility of a 50 basis point hike from the European Central Bank next week. Earlier this week, several speakers from the ECB highlighted the bank’s data-driven approach. They effectively said the decision between 25 and 50 basis points has not yet been made, giving EUR some upside against the greenback.
AUD ⇓
The Australian Dollar continues to be the biggest loser of the week, sliding in tandem with the New Zealand Dollar overnight. Inflation data out of Australia yesterday morning showed that price pressures are continuing to ease in the nation, validating the Reserve Bank of Australia’s decision to pause its tightening cycle and depressing AUD prices. Risk-off mood and mixed opinions on the health of the Chinese economy also weighed on the Antipodeans.
