The U.S. Dollar is trading in favorable yet familiar ranges as trading has remained within a half-percent range for most major pairs during the past few days
Overview
Following inflationary data showing consumers are still facing some price growth, Producer Price Index for July revealed that producers are certainly absorbing some cost increases. The actual figure came out showing prices advanced by 0.9% when just 0.,2% was expected. We shall see how that affects the perception that the Fed can make moves towards looser monetary measures.
Meanwhile, equity markets seem elated about the prospects of seeing cuts to interest rates as soon as September. Currently, economists are thinking 50 basis points may not be necessary and be a sign of panic, but the odds for such a reduction are starting to come up, this morning floating between 6.0-9.0%. A 25-bps cut is being fully priced for the September 17th FOMC policy announcement.
Friday will offer a few more key pieces of the economic puzzle with July Retail Sales, August Empire Manufacturing in N.Y. region, Industrial Production, as well as the University of Michigan Consumer Sentiment survey. Following PPI, at the time of writing the Dollar started rallying a bit against all peers.
What to Watch This Week…
- Retail Sales 8:30AM Friday
- University of Michigan Consumer Sentiment Friday 10AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇓
The Euro is headed downward following PPI numbers revealing inflationary pain for suppliers, which makes it a bit less likely Fed officials will be jumping on deep rate cuts. Additionally, Euro-zone data showed growth remains evasive with a second revision of Q2 Gross Domestic Product coming in at 0.1%, thus revealing the original take as true of the downgrade from Q1. With tough times across the pond, the Buck might catch further relief after a first half of the year that saw it lose 14.0% to the shared currency.
JPY ⇑
The Japanese Yen is the only exception to the Dollar’s surge against all else as commentary from U.S. Secretary Scott Bessent made headlines in Japan. The U.S. official explained that it would be best to narrow the interest rate gap between the two countries and was also supportive of Japan being more “hawkish.” In his view, the Bank of Japan has not done enough to try and tame inflation. If higher rates arrive, the Yen will appreciate greatly and, already, the idea that there will be some pressure towards a hike is making Yen more attractive than any other tender.
