The U.S. Dollar is dominating at the moment following the release of data points in China, highlighting a very difficult time for both suppliers and consumers.
Overview
Although the rest of the world has attempted its best to get away from COVID as well as the restrictions that came with it throughout the pandemic, China’s strict zero-COVID policy is causing havoc across supply chains that continue to downplay any recovery and progress. Indeed, the optimism of last week is fading quickly, facing the reality of a weakened China since 2020.Earlier manufacturing data in the form of the Empire Manufacturing showed that things in NY State are certainly looking gloomy, with the actual reading a negative (-31.3) vs. an expected 5.0. Months of aggressive inflationary growth have dwindled both demands as well as made it difficult for suppliers to make long-term decisions and investments in their productivity. That said, let us own the week. Federal Reserve Minutes come out Wednesday, tons of earnings for Wal Street bigs such as Wal-Mart, Reserve Bank of New Zealand decision mid-week, and U.K. indicators such as CPI also Wednesday.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
No major data and poor numbers out of China certainly make for a good weakening Euro recipe. The combination of recessionary pressures because of the energy crisis and the lack of reliability on one of its biggest partners is making things tough for EU nations as well as the Euro-zone users wondering about the remainder of the year.
Nothing significant yet out of Italy, but we will monitor any news on coalition-building that may aid the shared currency or sink it a bit further. Lack of stability on many fronts during a quiet month makes for plenty of volatility still.
GBP
Sterling is also down almost half a percent, while others, such as the Australian Dollar and New Zealand Dollar, are even deeper in the red following China’s lackluster Retail Sales, Investment, and industrial output. The U.K. will digest more data on Wednesday, and we shall monitor news regarding the transition to a new Prime Minister in September.
There may not be a ton to chew from here until Labor Day, but there will be swings as markets debate just how soft the landing can be for the economy with divergence in performance per region.
