Daily Market Update

Buck stops here! “Dovishness” sinks USD

July 03, 2024

The U.S. Dollar is trading in weaker ranges ahead of the 4th of July holiday following some comments suggesting “dovishness” accompanied by softening in the labor sector.


Per ADP Employment numbers in June, there were fewer payrolls added than expected, while Initial as well as Continuing Jobless Claims exceeded the forecast. In general, there is a sense across markets that inflation may have cooled some recently, but over time it has caused enough damage to force some companies to lay off people as well as hold back from hiring. Applications for jobless benefits climbed for the ninth week in a row, the longest poor streak since 2018.

When it comes to the Fed, New York’s President John Williams also aided in bringing down the Buck after his explanation for the natural rate of interest. He said that while recently there has been talk about how it has increased and will remain higher than it was is affecting markets, there is “no sign” the neutral rate had risen and that “the low r-star regime endures.” If indeed the Fed sees weakening that makes a cut appropriate in September, markets are buying it with odds of a cut for the meeting then at over 65.0%.

What to Watch Today…

  • 4th of July Thursday – MonexUSA Closed for Holiday
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The Euro is rising in value as are all other tender across the board following some data pointing at endured labor softening and no gains for wage growth from June in America. While we have pointed out struggles on the other side of the Atlantic and how renewed central bank divergence after the European Central Bank decided to cut borrowing costs has put downward pressure on the shared currency, we get relief as the likelihood of looser measures in the U.S. return. Data for the Euro-zone helped as it revealed that the Producers Price Index cooled off as expected, while a Composite reading of the Purchasing Managers Index registered a higher expansion than thought. Retail Sales will be out on Friday.


The Mexican Peso is one of the most improved currencies over the Buck this morning as the U.S. faces some challenges in the labor sector. Figures measuring investment and consumption have demonstrated that the economic fundamentals of the country remain solid despite major drama and anxiety over the elections, which gave tremendous power to one political party. In a random comment, outgoing President AMLO said he likes where the Peso is currently trading and that he sees no reason for it to move a lot more.

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