The U.S. Dollar is trading in mostly familiar ranges with a bit of a downward tilt against the Euro following key elections in France over the weekend.
Overview
Unlike in Mexico, the results have not affected the shared currency in a negative after the results seem to suggest there will be centrism and not dominance from just one political party in their legislative chambers. Meanwhile, some other currencies are benefitting from some positivity across global markets. In equities, the S&P 500 improved by 9.0% between April and June, marking the best year-over-year improvement since Q4 of 2021.
Oil and iron ore prices are going up off of news that China’s property market is starting to show signs of recovery. Additionally, for commodity-based currencies, the South African Rand (ZAR) is steady and has the potential for further appreciation after the announced cabinet for President Cyril Ramaphosa included members from the opposition who are considered good additions to the business and finance management of the country. The recent election focused on the need to offer more job opportunities, particularly to young professionals before they leave South Africa. There will be light data points throughout the week, starting with June Manufacturing Purchasing Managers Index coming in expanding as predicted and Construction Spending at 10AM. FOMC Minutes will be released on Wednesday.
What to Watch Today…
- Powell speaks on Tuesday.
- U.S. FOMC Minutes Wednesday
- 4th of July Thursday – MonexUSA Closed for Holiday
- Monex USA Online is always open.
EUR ⇑
The Euro has been trading at its strongest levels since mid-June, with the aftermath of the first round of legislative elections satisfying investors and economists who prepared for a landslide for Marine Le Pen’s party. Her “National Rally” did have a solid showing, but not the overwhelming knockout to all other parties that some had predicted. There is a second round next weekend, and already left-of-center alliances are being built to counter the effect of yesterday’s results. The overall victory for the National Rally seems more difficult than anticipated, and thus, European markets are welcoming it as assigned that no radical reforms or changes will come off it. While Macron may be on his way out as a lame duck, France will not face undesired disturbance. Euro-zone steadiness will be tested. Key inflation in the form of the Consumer Price Index is out tomorrow, PMIs on Wednesday, and Retail Sales on Friday.
GBP ⇑
Sterling is trading upward for now ahead of general elections in the United Kingdom on Thursday. After years of Conservative Tory rule, it is expected that the Labour Party will experience a swift triumph to bring on much needed changes to spending as well as policy that can spark faster levels of growth. The austerity that characterized the last decade will be challenged with incoming plans for a major overhaul of how the government services its constituents.
