The United States Dollar is fairly muted this morning, losing a touch of ground against its G10 peers through yesterday’s session and overnight.
Overview
With little in the way of economic data due out the remainder of the week, markets are focused on headline risk ahead of the set implementation of tariffs at midnight tonight. Traders are also on the lookout for a named replacement for outgoing Fed governor Adriana Kugler.
Following the expiration of the second (and, as Trump says, last) extension from April 2nd’s Liberation Day tariff announcements, markets aren’t assigning much weight to the levies set to go into effect tomorrow. Generally speaking, market anxiety around these events is considerably lower now than it was in the first few months of President Trump’s term, now that it’s been shown many of these levies can be backtracked and overturned immediately. Nonetheless, tomorrow’s deadline is still a risk event that is denting the Buck a bit this morning as uncertainty continues to abound. President Trump did threaten tariffs on the semiconductor sector and announced an investigation into Taiwan Semiconductor Manufacturing Company. As a result, risk-forward assets and currencies are underperforming a touch today. Trump also threatened higher tariffs on countries that continue to buy energy from Russia ahead of Friday’s self-imposed deadline for a ceasefire between Russia and Ukraine, with India bearing the brunt of the immediate actions.
Domestically there is little top-tier data remaining this week, so focus will shift to next week’s CPI readings due out on Tuesday. Inflation is expected to have accelerated slightly, from 2.% to 2.9% year-over-year. The Bank of England is also meeting tomorrow and is widely expected to cut interest rates by 25 basis points.
What to Watch This Week…
- Bank of England Rate Decision, Thursday
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇑
The single currency gained roughly half a percent versus the buck in trading yesterday and has continued that trend this morning, up another quarter percent of ground in Asian and European trading. Eurozone retail sales surprised to the upside earlier this morning, growing at an annualized rate of 3.1%, well above expectations of 2.6% growth. Some second-tier data also showed that factory orders in Germany slowed less than expected in June. Germany is also planning to launch a new investment fund to the tune of EUR 100 billion, and the Eurozone’s largest economy’s increased spending continues to drive the currency forward.
NZD ⇓
The New Zealand Dollar is the strongest performer in the G10 this morning, followed closely by its Australian peer, after data showed New Zealand’s unemployment rate rose less than expected in the second quarter of this year. Though unemployment still rose to 5.2% from 5.1%, matching its highest rate since Q3 of 2020, economists expected a larger jump, giving the Antipodean currencies a boost this morning. Some gain, traders report, has also come from short-covering against the Dollar.
