The U.S. Dollar is trading in stronger ranges across the board, with a few exceptions in MXN and AUD, following the release of retail sales data, which indicated stronger-than-expected consumer spending.
Overview
Overall, the data is suggesting the resilience of the U.S. economy is too strong for aggressive loose monetary policy to be expected. This has led to a surge in U.S. Treasury yields, with the market adjusting its expectations for the Federal Reserve’s monetary policy.
The Buck’s movement was also influenced by comments from Atlanta Federal Reserve President Raphael Bostic, who expressed openness to an interest rate cut in September, acknowledging signs of cooling in the labor market. This has resulted in a mixed market sentiment, with swap traders reducing their bets on insistent Federal Reserve rate cuts. At the time of writing, the chances of a 50-basis-point cut in September almost completely fell off after being over 50.0% in the last two weeks.
In addition, the morning’s financial updates have reported a rise in stocks and a dip in bonds, reflecting the robustness of the U.S. economy. The Dollar’s standing has also been impacted by a series of corporate and economic developments, including a tech giant’s revenue forecast and workforce reduction, a sportswear company’s new stakeholder, and a major e-commerce corporation’s revenue announcement. Tomorrow, we have Housing gauges left to digest along with the University of Michigan Consumer Sentiment.
What to Watch Today…
- U.S. CPI, Friday
- Monex USA Online is always open.
MXN ⇑
The Mexican Peso has strengthened, riding on positive U.S. economic data that bodes well for the health of the continent. The currency’s movement has been erratic, swayed by technical flows rather than local news. Today, the Peso continued its upward trend from yesterday, testing a key resistance level. If broken, we could see further appreciation. The recent central bank rate cut, influenced by lower inflation and economic slowdown, supports this trend. Meanwhile, the financial market is cautiously optimistic, with U.S. futures and European indexes on the rise, which could also affect the Peso’s trajectory. Next week will bring important numbers in the form of Retail Sales for June, Q2 Gross Domestic Product growth, and inflation.
EUR ⇓
The Euro experienced a notable decline against the U.S. Dollar, dropping by over half a percent from yesterday. This movement was influenced by the latest U.S. inflation figures showing signs of cooling. This shift highlights the ongoing sensitivity of currency markets to economic indicators and central bank policies. Expect more volatility next week as we get a glance at euro-zone productivity with items such as the Purchasing Managers Index.
