The U.S. Dollar is dominating and hitting fresh new highs across the board as the global situation has fully manifested itself in the flows of FX.
Overview
As the world seems to crumble facing record-high inflationary pressures, dwindling stocks, a supply chain with less dependability and reliability, and a conflict without a clear end in sight, the buck is simply establishing its safe-haven status. Countries are measured by their ability to manage situations, but at the moment no country feels safer from the stress of the shock of the globalized system than the United State. Geographic separation from the conflict and suspended pipelines make this Western hemisphere the better half of the globe to be in.
China headlines continue to put focus on the medical threat of COIVDS and apparently tougher versions evolving. This only further deteriorates the outlook for growth if indeed 2.5 years after the start of the pandemic, China needs to maintain such drastic oversight and implementation of shutdowns.
On Wednesday, we will get the release of Consumer Price Index figures to gauge where inflation stands. After that, more data will be there to consume in the form of the Producer Price Index. It is incredibly difficult to see when things could turn around, but much as we broke it down in the July Outlook, only peace or indications of a cease-fire can ease the current dollar strengthening.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro has fallen to a fresh new low against the buck, the worst since September of 2002. Russia is very likely going to completely shut down supplies of gas as it is going on a 10-day suspension for maintenance. As Europe comes to grips with the reality of its energy crisis, the Euro will be on the backburner unless there is action from the European Central Bank that merits appreciation. They will meet in 10 days on July 21st.
GBP
Sterling remains stuck on its weakest levels since the big drop of March 2020 as the U.K. deals with the search for its next Prime Minister. Personally, we are glad to hear the name Rishi Sunak since the former Chancellor of the Exchequer was a clear communicator and avid defendant of the well-being of people through the worst of the pandemic. We see obviously turbulence in the politics of the country at the moment and root for settling down the tensions that are keeping the U.K. on edge. As far as economics go, the Brexit legal battles bode quite poorly for commerce as we enter a period of dollar dominance when cooperation with mainland Europe would be more useful.
