The U.S. Dollar has dropped in value all across the board, falling to its weakest point overall since April 2022 according to the Bloomberg Dollar Spot Index.
Overview
Tariffs are once again affecting market sentiment as U.S. President Donald Trump stated overnight his intent to send letters to nations explaining the deal they can either take or leave when it comes to trading with the world’s largest economy. Tariffs applied have already caused a slowdown for small and mid-sized companies with the RSM U.S. Middle Market Business, a measure by the Chamber of Commerce of performance, dropping by the most in a decade for its Q2 reading. Some economists are comparing recent data points to troubles experienced during the pandemic affecting the supply-chain.
Meanwhile, oil prices are up to a 2-month high with the U.S. also announcing its intent to have U.S. troops leave their Middle East posts as the region’s tensions heat up. In terms of fundamentals, Initial Jobless Claims as well as Producer Price Index readings from earlier painted a picture in which slower price growth and weakening of the labor sector are helping increase the odds that the Federal Reserve can feel comfortable with cutting interest rates sooner rather than later. PPI for May came in at 0.1% vs. 0.2% expected while the 4-week average for claims jumped from 235k to 240k.
Tomorrow, we will have the University of Michigan Consumer Sentiment survey for June, expected to be rosier than the previous results registered. We shall get more details as the day progresses on tariff implementation via mail correspondence while also monitoring developments in Asia following a deadly plane crash suffered by Air India.
What to Watch This Week…
- University of Michigan Consumer Sentiment Friday 8:30AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇑
The Euro is officially trading at its year-to-date high and is currently hovering at its strongest level over the Buck since late 2021. The Euro-zone is in a unique position on the trade negotiation front because it is, fundamentally, a bloc of individual nations, making a unilateral trade deal less likely even as the White House renewed overnight ultimatums on tariffs. The Administration has stated several times that negotiations with the EU are “difficult,” but effectively this could put the economic bloc in the driver’s seat, and some nations have shown real interest in striking a deal with China. This reality combined with a confident European Central Bank makes for a resurgent Euro at a time when trade continues to navigate turbulent waters.
GBP ⇑
The British Pound has improved this morning to its highest value in three years. This comes primarily as a result of declining faith in the U.S. Dollar based on uncertainty over the future of free trade. Economically, the U.K. is not impressing anyone with April Gross domestic Product, Industrial Production, and Manufacturing all in negative territory and performing worse than anticipated. GDP was in deeper contraction than expected at (-0.3%) vs. (-0.1%), Industrial Production came in at (-0.6%) vs (-0.5%), and Manufacturing declined by almost 1.0%. Chancellor of the Exchequer explained in her recent budget that the U.K. will increase spending in military and defense which could aid in building some momentum for the long-term while coping with challenges to boost domestic upgrades.
