The U.S. Dollar is trading in weak ranges across the board as markets prepare for the Federal Reserve’s policy announcement and press conference later today at 2PM.
Overview
In terms of monetary policy, it looks likely the Fed will be signaling an interest-rate cut for their next meeting in September. As a reminder, current rates are at their highest in two decades. Expect Fed Chairman Jerome Powell to be scrutinized about timing of future cuts and whether officials worry about who wins in November.
Domestic stocks and those associated with high-end tech experienced a recovery as news came out that the planned tariffs and restrictions on semiconductors will not affect European makers such as the Netherlands, Japan nor South Korea. Plans to counter China will be met with some retaliation down the line as relations have soured.
Furthermore, in geopolitical tensions, oil prices climbed overnight after Israel and Iran confirmed the killing of Hamas’ political leader after an assassination. On our hemisphere, Venezuela is also part of the turbulence as election results have been protested and sparked political violence across the country.
ADP Employment Change this morning showed less payroll growth in July than estimated at 122K vs. 150K. For the remainder of the week, we will get Purchasing Managers Index figures and a plethora of figures on Friday that include employment numbers as well as orders.
What to Watch Today…
- Bank of England Thursday
- U.S. Unemployment, Factory Orders on Friday
- Monex USA Online is always open.
EUR ⇑
The Euro returned to experiencing some gains following inflationary data that puts pressure on the European Central Bank to withhold lowering interest rates. Central bankers worry that stubborn inflation can be enhanced by increasing the money supply thus their hesitation in turning more simulative in their measures. However, they have to also be concerned with German lack of growth, in fact contractions, so they must look at how to do blanket policy that does not exacerbate problems. For now, the Buck seems to be on the softer side after a streak of momentum based on economic performance divergence with the rest of the globe, particularly the other side of the Atlantic.
JPY ⇑
The Japanese Yen is trading at its strongest level since March 19th after the Bank of Japan made the decision to increase borrowing costs by raising their Upper Bound rate to 0.25%. Additionally, it was confirmed by the BOJ that they successfully propped up their currency after spending USD$36.0BN to alleviate Yen weakness. Their next meeting will be on September 20th which will give officials plenty of time to gauge if indeed the economy can withstand further hikes and thus see an even stronger Yen.
