The United States Dollar is clawing back some of the losses it took in the overnight session this morning after ADP released data showing private payrolls added 497,000 jobs last month, well above the expectation of 225,000.
Overview
Asian and European equity markets racked up heavy losses before the opening of the US market, driving demand toward more traditional safe haven currencies, but this morning’s strong payroll data is turning the tide for the Buck.
Treasury Secretary Janet Yellen arrived in Beijing this morning to attempt to quell rising trade tensions between the US and China as Goldman Sachs put out a warning on the sector and drove Chinese bank stocks down nearly 5 percent. These moves are providing quite the boost to the Japanese Yen, up nearly a percent on the week so far against USD. The global mood as a whole remains, overall, quite sour.
The domestic mood in the US does remain a bright spot in an increasingly murky global economy; the Fed’s release of its June meeting minutes yesterday gave markets a bit more faith that the central bank will actually hike twice more this year, as Chair Jerome Powell has stressed several times. The US labor market remains tight, giving the Fed room to act to bring inflation back down to its 2 percent target. The minutes showed that while officials ultimately voted unanimously to hold rates steady, there was plenty of debate about the possibility of a hike. As of now, the odds of a 25 basis point hike at the end of this month are all but baked in the cake. We expect to see USD trade-in ranges relatively close to where it is now until the Fed takes action on July 27.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
Holiday Donation Results – Thanks for Helping!
Earlier this year, Monex made a donation in honor of your continued trust in us for your FX needs. We’re happy to report that each charity received a percentage of an overall amount based on your votes. Thank you for participating! View Results
Monex USA introduces OPTIONS
With currency exchange rates in a constant state of flux, companies transacting cross-border face the risk of losing substantial sums of money if they fail to hedge their exposure to these shifts. Monex USA now offers a wide range of FX options that could help your business better manage risk. Learn More
GBP ⇑
Pound Sterling finds itself with a bout of strength this morning against the Greenback as bets on the trajectory of the Bank of England’s interest rate decisions placed its peak at 6.5% by February of next year. Markets remain wholly unconvinced that the central bank will be able to tame rampant inflation in the nation without substantially hobbling the UK’s economy, prompting 2-year British gilts to price at their highest rate since 2007. It’s clear the Bank of England has a near-impossible task ahead of it, and the macro picture of the UK remains quite grim.
ZAR ⇓
The South African Rand slumped down this morning in tandem with most emerging market currencies, declining more than a percent against USD on strong payroll data out of the US. All signs point to sustained high-interest rates from the US and the UK, driving down demand for more volatile minor currencies and strengthening majors. Rand bond prices remain higher than those out of the US, but the global sentiment is keeping the currency weaker
