The U.S. Dollar is trading in mostly familiar ranges as markets welcome the extension of the truce between the U.S. and China as they iron out the details over a new trade deal
Overview
At the time of writing, markets were also forming a reaction to inflationary data in the form of Consumer Price Index which came out just as expected for July. The 0.2% expansion for the month shows that price growth remains although it is rising at a slow pace. CPI for the year is up to 3.1%. Traders and investors seem to believe there will be room for the Federal Reserve to do more than just one rate cut this year, but for now, these numbers show there will be a problem for policymakers as they cope with the reality of “stagflation,” following labor indicators revealing there is struggle.
China and the U.S. agreed to give each other more time, another 90 days, to negotiate as the two largest global economies look for ways to reduce interdependence and decouple while protecting their technological industry. We shall see if announcements on any other trade fronts will move the needle in the Buck’s favor as it did when Japan and the EU agreed to new terms to avoid tariffs being levied. Producer Price Index numbers will be due on Thursday and could exacerbate the issue of ongoing inflationary pressures. For now, the Buck is on a decline affected by the increased odds of a lowering of borrowing costs in September from 86.0% yesterday to 96.0% currently.
What to Watch This Week…
- Euro-one, U.K. GDP Q2 revised Thursday
- U.S. PPI Thursday 8:30AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇑
The Euro is slightly rising as the dollar dwindled following the release of inflation data reveling price growth remains an obstacle in the financial system. Good news are hard to find with the ZEW Survey of Expectations coming in much lower than its prior reading, showing that there is worry about economic progress, or lack thereof, in the Euro-zone. Thursday, we will get to see Gross Domestic Product for Q2, expected to show a measly 0.1% expansion. Anything higher in the revision could add to Euro fortunes.
GBP ⇑
Sterling is trading at its strongest point since mid-July, rising after improvements to labor as well as wages. Weekly earnings excluding bonuses rose 5.0% in June while Employment grew much higher in the last 3 months than estimated coming in at 238K vs. 185K. Thursday will also feature U.K. GDP figures for Q2.
