The U.S. Dollar is trading in stronger ranges all across the board ahead of the release of the FOMC Minutes from the last meeting.
Overview
Markets are indeed jittery about the Fed’s insights only will reveal a continued willingness to hike interest rates to try to combat inflation. While the economy seems to be cooling down some, July Retail Sales revealed a better-than-expected expansion. Nevertheless, the monetary policy of the U.S. is not the only thorn in the outlook for global markets.China’s economic situation continues to disturb supply-chain arrangements, but more importantly, it seems like the ties with Russia are worrying leaders about potential aggression. Following the firing of missiles off of its shores to intimidate Taiwan after an undesired U.S. visit to the island, China has sent troops to Russia for a joint military exercise. We shall see what is made of this as it develops, but it does guarantee a stronger dollar based on fears and basic uncertainty.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro is the currency least suffering at the time of writing from a dollar rally that has been sparked by turbulence in geopolitics and concerns over Fed hawkishness. Indeed, the shared tender has been unable to retain gains from earlier in the month as the second half of August has been plagued by yet another cut to the flow of gas from Russia to the EU nations. Furthermore, earlier, the ZEW Survey of expectations dropped even further with a bleak winter currently forecast for Germany and others.
GBP
The Pound is falling following the release of higher inflation gauges than expected out of the U.K., pointing at price growth very challenging to bring down. Consumer Price Index for the year now stands at 10.1% vs. 9.8% expected while the Producer Price Index also came in at 1.6% vs. 1.0% estimated for July. More importantly, the U.K. treasury bond market is showing signs of inflation, with the U.K.-Gilt curve now inverted for the first time since 2019
