The U.S. Dollar is trading in mostly familiar ranges as markets look towards recovery after poor economic data on Friday that changed the narrative about future interest rate cuts
Overview
Last week was marked by economic trouble as disappointment across markets seemed the theme with negativity over trade and friction between the White House and statistics.
The questioning of the use of tariffs exacerbated after evidence that labor is running into struggles and that the economy is feeling pressures across many industries. It is now worth considering that the Federal Reserve will need to step in and alleviate the financial environment by cutting interest rates. Odds of a reduction in September of 25 basis points stand at 90.0%. They stood at 47.0% on Thursday.
Since aid may be coming, futures for the S&P 500 Index and other exchanges are up as risk-takers welcome the lowering of borrowing costs as music to their ears. Meanwhile, the administration will be looking to replace departing Fed governor Adriana Kugler after she submitted a letter of resignation on Friday. Fired Chief Labor Statistician Erika McEntarfer will also be replaced soon. Later at 10AM we get Factory Orders as well as Durable Goods Orders for June.
What to Watch This Week…
- Non-Farm Payrolls Friday at 8:30AM
- Factory Orders at 10AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇑
The Euro is looking for reasons to gain back momentum after falling by over 3.3% throughout the month of July, the first one this year in which the Buck gained overall. Struggles in the Euro-zone knocked down the currency along with the idea that the signed agreement with the U.S. to avoid higher tariffs is a bad one short-term as well as long-term. Criticisms on European Union President Ursula Ven Der Leyen have come from all leaders across the EU, including Orban in Hungary and Macron in France. This week may give a few silver lining opportunities as data is analyzed. Purchasing Managers Index for July will be out tomorrow, while Producer Price Index and Retail Sales for July come out on Wednesday.
MXN ⇓
The Mexican Peso came out of July the most resilient currency against the U.S. Dollar resurgence by dropping only 0.7% in value for the month. Mexican leadership have worked very closely with the White House all year to avoid getting hit by tariffs and have done a better job in evading problems in comparison to Canada and other countries negotiating with the U.S. Economic data this week will gauge inflation, investment, consumption and vehicle production and give us guidance if Peso will be able to stay afloat or experience rapid losses as we have witnessed for the Euro. After six months of dollar devaluation, seems like there is room for a comeback, but Peso remains the least affected. MXN has appreciated 9.0% thus far into the year.
