The U.S. Dollar is trading at its weakest point since April of 2022, hitting a fresh new low per the Bloomberg Dollar Spot Index as markets adjust to lower chances of recessionary pressures developing.
Overview
The U.S. Dollar is trading at its weakest point since April of 2022, hitting a fresh new low per the Bloomberg Dollar Spot Index as markets adjust to lower chances of recessionary pressures developing. Monetary policy has achieved some of its goals in slowing down the pace of inflation while also being accurate about the economy’s resilience. Data-wise, the economy seems to be going along as expected, with June Retail Sales excluding auto & gas prices rising by 0.3% as forecast, while the May figure was upwardly revised to 0.5% from 0.4%.
Globally, the world has not been impressed by China’s overall economic situation nor the revelation that tycoon developer Evergrande faced losses in the billions of dollars last year. Nevertheless, the silver lining comes in the belief that the Chinese government will be doubling efforts to stimulate activity all across industries. More importantly, the world seems to be welcoming efforts from both China and U.S. governments to ease the tensions in recently souring relations. Anything that seems like a genuine attempt to work together and handshakes in front of the media will help in this environment where it seems the buck’s ability to stay afloat is being tested and floundering.
What to Watch Today…
- No major economic events are scheduled for today
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EUR ⇑
The Euro remains around its strongest levels since February of 2022 ahead of tomorrow’s much-awaited Euro-zone Consumer Price Index numbers. The pace of inflation is expected to slow down to 5.5% annually after registering above 6.0% for the month of May. Commentary from various European Central Bank members as they meet to discuss various topics for the eastern bloc of nations has been on the hawkish side. CPI, as well as Purchasing Managers Index figures, will be key until July 27th when the ECB meets again, expected to hike by 25 basis points at 93.0% odds. Anything else would be a surprise and crush Euro gains.
AUD ⇓
The Australian Dollar and New Zealand Dollar are the biggest movers this morning, falling as the news out of China paints a worrisome picture that makes the Antipodean business leaders wonder about demand. As infrastructure and housing continue to face multiple headwinds, news that Evergrande, a problematic enterprise that has been aided by the government, continued to cope with insurmountable losses. However, after dropping almost by 1.0%, ‘Aussie’ has managed to curtail the depreciation as markets seem to be more optimistic about the second half of the year being one when China truly recovers after a drag ever since the pandemic. It is a mixed market of sorts where central bank decisions, as the month comes to a close, will give more clarity.
