The U.S. Dollar is starting the week with some serious swagger following a holiday weekend that witnessed poor data for other regions and exacerbated the risk-off sentiment of late.
As it has become common, once again, China’s economy revealed further cause for concern as its Services sector registered the slowest level of growth in 2023. Investors and traders are convinced that the government will continue to push for stimulus to alleviate the problems at hand, but doubts are increasing over the country’s ability to mount a more substantial comeback to growth that can be contagious to the rest of the globe.
On the other side of the Atlantic, the Eurozone also had economic indicators showing that economic expansion is becoming difficult to achieve. Supply-side data in the form of Purchasing Managers Index figures did not register a positive expansionary reading of 50.0 or higher for any of the four largest economies of the union. A rough start for FX flows as the Dollar dominates will be hit with a plethora of figures and commentary at events from key central bankers from across the world. Per the Bloomberg Dollar Spot Index, this is the strongest Buck since mid-March.
What to Watch Today…
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The Euro is trading at its weakest point since mid-June as a dollar rally has been merited over the Monday off as data paints a dire picture for the Euro-zone. None of the largest four economies of the monetary union registered an expansionary reading for their PMI number in August. It is worrisome that the whole area seems to be struggling for some time now, and Italy’s momentum has been lost. There is Gross Domestic Product released on Thursday as well as Retail Sales and Factory Orders throughout the week that likely will give the Euro further pain rather than a reprieve.
The Australian Dollar is plummeting and has dipped to its weakest point since November of last year following disappointment over China. Aussie is just a microcosm of the FX volatility being experienced by commodity-based currencies, and the tender is closely interdependent with Chinese success or failure. As the globe gets all geared up for the end of the year, we will watch out for anything that can knock the buck off of its high pedestal but likely will see plenty of swings as central banks scratch their heads over how to keep things accommodative and not so restrictive.