The U.S. Dollar halted its rally against most currencies, with a few making a push towards recovery after getting demolished to start the week and ultimately falling to multi-month lows.
Overview
Overall, the Buck is holding steady at around its strongest levels since March. Today, markets seem to be concerned with oil prices jumping and adding to inflationary woes while a sluggish global economy is coping with concerns over the world’s second-largest economy China. While the U.S. looks to be able to sustain economic growth, doubts keep growing over the situation on the other side of the Atlantic, looking more and more stagnant.
Some headlines point at recessionary pressures developing elsewhere other than the U.S., only further fueling pessimism over other tenders. Across equity exchanges, the worries are showing up with performances all in the red, with the Japanese NIKKEI the only exception. Although there seems to be a jump toward safety, the Japanese Yen has not been appreciated as it typically would. This rapid decline could see a turnaround, though, after Japan issued a warning over its shattered value, currently the weakest in 10 months against the greenback.
We shall see when they make some moves to counter the fall. In terms of data, we have the S&P as well as the Institute of Supply Management’s measure of Services sector expansion in August.
What to Watch Today…
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EUR ⇑
The Euro has stopped its poor run regardless of economic data confirming that the Eurozone is facing some tough times. Growth and expansion have evaded all recent readings, with contractions surprising and causing speculation that a recession, something forgotten about 3 months ago, could indeed develop for the entire area. With some nations, such as the Netherlands, already in negative territory, the cause for worry is merited. Retail sales figures for July confirmed a forecasted contraction of (-0.2%), failing to advance for a second row in a month. We will get the Gross Domestic Product for the second quarter tomorrow.
CAD ⇓
The Canadian Dollar is indeed at its weakest point since March, as economic sluggishness has characterized the year for the neighbor and trade partner. Later today at 10 AM, the Bank of Canada is announcing its monetary policy decision. At their last meeting in July, the BOC chose to hike by another 25 basis points but is expected to hold this time around. At 5.0%, disinflation has materialized, but the economy seems to have been affected by the higher borrowing costs, especially in a country with costly taxes. Some analysts predict a hawkish tone.
