The U.S. dollar is trading in mostly favorable ranges following a week, which gave little indication of when exactly the Federal Reserve will be ready to cut interest rates.
Overview
Indeed, after the Fed’s meeting, it became clear that even as some data has softened, it has not weakened enough to merit a “dovish” pivot on policy.
As it stands, most fed officials seem to agree that this year may be too short for penciling in more than just one rate-cut but seem to be willing to consider 2025 as potential time for reductions if the economic indicators suffice in deterioration. Although there is a meeting at the end of July, the September meeting is becoming more crucial with odds of a cut occurring at 60.0% then.
Expect move this week to be inspired by a collection of commentary from Fed members opining and forecasting action, while data points are also released in the form of Retail Sales and Industrial Production tomorrow. The week is broken in two halves by the Juneteenth holiday, which we will be observing and closing for on Wednesday. Friday, we will close out with a few gauges on housing. We will hear from other central banks as the Reserve Bank of Australia announces decisions tomorrow and the Bank of England on Thursday.
What to Watch Today…
- U.S. Retail Sales & Industrial Production Tuesday
- JUNETEENTH DAY – Wednesday – Monex USA Closed
- Bank of England Thursday
- Monex USA Online is always open.
EUR ⇓
The Euro is moving around its weakest levels since start of May as anxiety takes over the European markets with French elections causing havoc in bond as well as stock exchanges. France will be holding congressional elections at the end of the month with two rounds to decide the control of French lawmaking. President Emmanuel Macron called this snap election after his party faced major losses in elections for the European Parliament.
Domestically, it looks like the country is highly polarized while the control of the country could be either a far-right coalition or a far-left one, meaning that the more preferred centrist agenda Macron has tried to stick to in order to hold EU goals may not have any support going forward. As far as running the country, the opposition presented by Marine Le Pen and the allies she leads could turn the country into a more protectionist nation, looking to act more on its own and less with a continental or even monetary mindset. The risks are high for Macron and for the EU’s second-largest economy.
MXN ⇓
The Mexican Peso continues to trade in weak ranges as it is finding it hard to get away from its lowest point to the dollar since March of 2023. In the past two weeks since the Mexican election gave Claudia Sheinbaum the presidency and her party a ton more seats in Congress, the once “Super” peso has been crashing because of concern that a one-party system may dominate her administration. A lack of checks and balances from insufficient opposition is worrying business leaders as well as law experts that reforms may be coming Mexico’s way that will threaten its favored status as a place for investment post-pandemic. We shall hear directly from the President-elect at 12 PM EST when she is scheduled to give a speech. She is holding transition talks with other leaders.
