The U.S. Dollar is up this morning, rallying against all currencies across the board and hitting its strongest levels since the start of July.
Overview
Much of the worries typed about yesterday in regard to a slowdown in the global situation in comparison to the thriving U.S. economy have been fueled today by dwindling indicators out of the world’s second-largest economy. Chinese exports revealed their biggest decline since early 2020 when COVID-19 shocked the world. Additionally, imports also contracted.
On the American front, data has not been negative. However, the credit rating downgrades continue. After Fitch decided to lower the “AAA” standing for the U.S., Moody downgraded ten U.S. banks that fall in the category of small and midsize lenders. Overall, it is a dark Tuesday as all markets see red, with the MSCI Emerging Market Index headed toward its worst performance in a month. We shall see what, if anything, alleviates the current sour mood all over.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
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EUR ⇓
The Euro is losing ground after an announcement that sank the shares of financial institutions during the European trading session. Italy’s government revealed a plan to tax windfall profits. Italian Prime Minister Giorgia Meloni decided to make the news at the last late-night session of the cabinet before a summer break. Banks such as UniCredit and Intesa Sanpaolo are plunging after officials pointed at their great success in the first half of the year, something also credited to a much-criticized European Central Bank agenda to hike interest rates in the name of combatting inflation.
MXN ⇓
The Mexican Peso is falling along with all other tenders in the face of major headwinds for the global economy and fears of a financial crisis developing after eleven interest rate hikes by the Federal Reserve, which may not be done adding to borrowing costs. MXN is now 3.0% away from its 2015-zenith reached last month. Emerging markets have held alright, but regional differences matter as Eurasian countries suffer from a struggling China and no rest in sight to record-high interest rates. Mexico is next to the U.S. and has followed the fed’s mandate up until now. We will hear from Banxico, the central bank, on Friday when we will gauge how likely officials are to pivot from their hawkish mentality
