The U.S. Dollar is trading in mostly tight ranges as the globe takes caution with escalation of conflict in the Middle East disrupting all kinds of market classes.
Overview
Fear is taking a grip of markets with what appears to be failed attempts to get to talk about a ceasefire between Iran and Israel, the latter which is demanding the former ends its pursuit of developing nuclear weapons. Attacks back and forth have caused civilian casualties.
The G-7 Summit even lost one of its main actors in the American President who decided to leave in order to have closer control and monitoring of the delicate situation. Faith that the feud would be contained is truly fading with U.S. equity futures already dropped 0.7% while oil prices are up with Brent Crude reading at 1.8% higher. Several tankers suffering destructive fires added to the nervousness suddenly when it comes to energy supplies. Some LATAM FX are hitting new weekly highs such as Colombian Peso, which are improving as a result.
With Retail Sales out showing a deeper contraction than expected at (-0.9%) vs. (-0.6%), the Buck immediately started heading toward negative territory overall. To gauge momentum, or lack thereof, in productivity, we will wait for Industrial Production at 9:15AM, which is expected to be flat for the month of May. Today we might see a relatively quiet FX market, pending some wild developments, as investors and traders eagerly wait for the Fed press conference tomorrow at 2PM.
What to Watch This Week…
- FOMC Meeting and Presser Wednesday 2PM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
MXN ⇓
The Mexican Peso is slightly down, falling from its highest value point since mid-August of last year. LATAM FX in general is seeing better levels as the Buck has dwindled with many across the globe seeking alternatives for trade in the midst of tariff-related anxiety. Mexico, as well as other Latin American countries, can benefit from the need for closer accessibility to energy resources as the other hemisphere is afflicted by armed wars with heavy damage to industry. Tomorrow, there will be plenty of volatility with the Fed, but MXN could have an idiosyncratic bump if Q1 Aggregate Demand and Supply come out strong. The prior reading was 1.9%.
JPY ⇑
The Japanese Yen is not changed much following a Bank of Japan meeting that concluded without any changes to the prospects of increasing interest rates. Japan is currently facing contractionary pressures as growth has evaded the Pacific Rim nation thus far in 2025. BOJ officials want to play it safe and decided to slow their pace of bond purchases for next year. Yields for longer-dated treasury bonds improved slightly as well. We will not know until mid-August when Q2 figures are out for Gross Domestic Product if the Japanese economy was able to overcome its Q1 0.0% reading. The BOJ will meet two weeks before that on July 31st. Plenty can occur from now until then.
