The U.S Dollar is trading in mostly weaker ranges with Mexican Peso being a great exception collapsing overnight following elections south of the border.
Overview
May ended up being a month of losses for the Buck that in fact could continue depending on the data results from plenty of indicators slated for the week.
Some Manufacturing data will be out later today, along with Construction
Spending for April. Tomorrow, we gauge labor with JOLTS Job Openings and supplier spending through Factory as well as Durable Goods Orders. We get further Purchasing Managers Indices on Thursday before we get the Employment Situation on Friday.
This week will help in measuring jus how strong the economy is moving along and if it gives signs of “stagflation,” stagnant economic progress while prices remain on the rise. Focus on the need to stimulate growth back up in the U.S. could help in increasing the chances for interest-rate cuts by the Fed for what is left of the second half of 2024.
As of now, odds of a 25-basis-points cut by the Fed at their July 31st meeting stand at 14.0%. The Fed will have a chance to address concerns when they meet next week on June 12th. Equity markets will have excitement in testing whether the S&P 500 can maintain strength after posting gains six out of the last seven months. GameStop and other “meme” stocks are making an interesting return-inspiring headlines.
What to Watch Today…
- ECB Meeting Thursday
- U.S. Factory and Durable Orders, JOLTS Tuesday
- U.S. Employment Situation Friday
- Monex USA Online is always open.
EUR ⇑
The Euro finished off May 1.2% stronger after a month that gave some doubts about the U.S. economy’s momentum and improved the outlook for the Ancient Continent. We shall see if the progress made can be progress kept as we get some PMIs, Producer Price Index, as well as Retail Sales throughout the week. Gross Domestic Product will close out the week on Friday. On Thursday, the European Central Bank is expected to make a cut to interest rates, which, sort of like the reduction by Mexico’s Banxico, could be perceived as a “hawkish cut.” This means that the move is likely to boost growth.
MXN ⇓
The Mexican Peso is down to its weakest point against the Buck since December as elections on Sunday produced a scenario that has business leaders a bit concerned. Claudia Sheinbaum became Mexico’s first woman President after a historic landside that was accompanied by major gains in the legislative chambers. Indeed, the Morena Party looks to have a Super majority that could allow for major projects in infrastructure as well as Constitutional powers reforms. We warned of this volatile situation in our note last week.
After the 3.0% decline overnight, it is time to let the post-election excitement settle and see if Claudia gives indication that she will deviate from the diplomatic ways of AMLO and give sign of being more aggressive on change. If not, we can see how easily Peso recuperates what is has lost. Expect her to be celebrated by most global leadership with Argentina’s Milei to watch for his disapproval.
