The U.S. Dollar is starting off June with weakness all across the board, trading around its weakest levels since the Summer of 2023 per the Bloomberg Dollar Spot Index.
Overview
Another weekend had come and shaken the stability of markets once again after Friday’s announcement that the U.S. would be adding tariffs to steel imports. Furthermore, in the past 48 hours, both American and Chinese leadership have announced the end of the truce between the two countries as they are both accusing each other of not honoring their agreements. As far as traders and investors are concerned, tariffs will not be going away anytime soon, which is causing a rethink over the dollar’s reliability.
We feel there could be room for even deeper losses as the markets ponder the need to stimulate the American economy down the line. Thus far, the odds of the Fed cutting interest rates in the next three meetings are low, but we see this changing big time if no indicators improve the outlook. Meanwhile, tensions are increasing in armed conflicts in the Middle East and the Eastern Front. A major attack by Ukraine added to concerns about Russia’s willingness to talk peace in any way.
Oil prices climbed as OPEC+ members decided to increase production, but not by as much as markets expected, thus giving a boost to WTI Crude, its biggest since April. We will have pieces of data to chew on throughout the week, but the biggest risk will come in the form of Non-Farm Payrolls on Friday.
What to Watch This Week…
- Durable Goods Orders tomorrow 8:30 AM
- US Nonfarm Payrolls, Friday 8:30 AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇑
The Euro is trading at its best level over the Buck since the end of April, improved as the European continent watches out for escalation after Ukraine’s attack on Russian air bases. The conflict has not seen either country lower their pursuit of attacks, and the latest have been condemned by European allies who were hesitant before to have Ukraine attack into Russian territory using weaponry provided to aid in countering. As far as economic indicators go, tomorrow we will get a chance to analyze inflation in May via the Consumer Price Index. We will also watch for the reaction to elections in Poland, which saw a victory for the less EU-inclined nationalist candidate.
MXN ⇑
The Mexican Peso has strengthened to its highest value since September of 2024, climbing as are other peers over a dwindling USD. Mexico is in the midst of conducting its first election, giving voters the chance to choose judges, even those who can be in the Supreme Court. While typically strange changes to democratic norms create an environment for currency depreciation, the Peso is moving upward in value as there is a renewed popularity for carry-trade. As investors look for yield and trade away weakened assets for MXN, the chances of it losing ground head down. We shall see if MXN takes any tumble from data this week, which will be gauging consumption, vehicle sales, confidence, and investment.
