The United States Dollar has, after several straight sessions of losses, finally managed to reverse its fortunes and is trading stronger across the G10 this morning
Overview
Rebounding from multi-year lows across several major currencies, this morning’s move looks more like a risk reversal than anything related to the US’ macro picture. Hedging costs have picked up across the curve amidst profit-taking as well, pointing to minimal movement in real-money trades. Focus domestically remains on the tax and spending package that cleared the Senate yesterday and heads back to the House for a final vote, and internationally traders are warily eyeing the July 9th deadline that marks the expiry of a 90-day pause in punishing reciprocal tariffs levied by the US.
Ahead of the July 9th deadline, President Trump’s rhetoric toward nations that have not yet signed trade deals with the US continues to heat up, with Japan as the target overnight. Japan was threatened with 30-35% tariffs, though as always with trade conversations, markets are taking this threat with a hefty grain of salt, and Prime Minister Ishiba has stated that he’d prefer no deal to a bad deal especially ahead of Japan’s upper-house election on July 20th. As it stands now, the UK is the only major world economy that has signed a comprehensive trade agreement with the US, though India and the European Union do appear to be making progress. US markets also received June’s ADP employment change report this morning, which showed that ADP private payrolls unexpectedly contracted last month – the worst reading in more than two years. Though the ADP report and the government’s non-farm payrolls, due out tomorrow morning, don’t have the strongest correlation, such a negative release this morning is downgrading forecasts for tomorrow’s figures and trimming the Buck’s gain today.
What to Watch This Week…
- US Non-Farm Payrolls, Thursday 8:30AM
- Monex USA will be closed Friday July 4
- Monex USA Online is always open
The complete Economic Calendar can be found here.
GBP ⇓
Pound Sterling is far and away the worst performer in the G10 this morning, losing more than a percent of ground against USD and unable to capitalize on any Dollar weakness following the ADP jobs report. During today’s Prime Minister Questions in Parliament, Keir Starmer declined to say whether Chancellor of the Exchequer Rachel Reeves would remain in her post. The UK’s fiscal outlook, should Reeves leave her post, becomes substantially more uncertain and GBP is sliding fast and far as a result, especially coupled with words from BoE head Andrew Bailey in Sintra highlighting a murky economic outlook amidst global uncertainty.
AUD ⇓
The Australian and New Zealand Dollars are also underperforming this morning, sliding half and two thirds of a percent versus the Buck respectively. Australia’s May retail sales, released overnight, came in under expectations at 0.2% month-over-month versus 0.5% expected. Though still positive, and close to in line with with Reserve Bank of Australia’s forward-looking targets and goals, this does bolster the case for a 25 basis point cut from the RBA later this month as household consumption continues to read soft.
