The U.S. Dollar is trading slightly higher against most peers as markets await for the announcement of other trade deals and look for improvements in the American economy.
Overview
Labor numbers this morning showed that Initial Jobless Claims continue to fall short of expectations, which is fostering optimism that July Non-Farm Payroll figures will be better than expected when they are released next week. Later at 10AM, we will get Purchasing Managers Index figures and will see if they expanded, thus giving the Buck another boost based on good data. Tomorrow’s Durable Goods Orders are forecast to show contraction so any surprise on the other direction could help Dollar appreciation further.
Things have not been consistent, and economists are scratching their heads at all the risk-appetite taking place while the prices of safe-haven assets such as Gold also rise. Nevertheless, credit has to be given to surging equities as Bloomberg intelligence points out that 83.0% of the S&P 500 Index companies that have reported earnings have beat estimates. Perhaps alleviation from tariffs as some countries strike deals can remain as sentiment, but firms have also concluded that they have been absorbing inflationary pressures from changes and anxiety associated with trade policy in the past 6 months. It will be an interesting period before the August 1st deadline for nations not to take a major costly hit.
What to Watch This Week…
- Durable Goods Orders Friday 8:30AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇓
The Euro is mostly flat following the decision by the European Central Bank to hold monetary policy in place and interest rates untouched. It is the first time since their June 3rd, 2024 meeting that they chose not to lower borrowing costs. ECB President Christine Lagarde sounded confident in explaining that officials feel satisfied with inflation being around 2.0% as they desired. It is possible the shared currency has plenty of room to gain as equity markets on the other side of the pond are also climbing as traders and investors await for a deal between the U.S. and Europe to avoid deepening the trade war and making it costlier.
JPY ⇓
The Japanese Yen dwindled as the political situation in Japan remains fragile and economists begin to question the deal agreed to with the United States. Some officials have stated to media that there has been no discussion on how to implement the trade deal. Additionally, Prime Minister Shigeru Ishiba has been defending his post and said he is looking to focus on the achievement that the pact with the U.S. represents. There were news reports overnight saying that there were plans for Ishiba to resign by end of August. The loss of ruling majority has had a big negative impact on his administration and faith in its duration.
