The U.S. Dollar is trading in tight ranges ahead of Wednesday as it represents the biggest risk event of the week with the Fed announcing its decision.
Overview
Traders are currently pricing in a rate cut for September, but tomorrow will be key in gauging just how committed officials are in exercising loose monetary policy measures. Recent data has been mixed, with common indicators witnessed in previous build-ups to recessionary times no longer being reliable while growth remains a beacon of strength. Various economists have said the Fed should get ahead of bad times showing up so tomorrow’s tone and press conference will be closely monitored.
Once we hear from the Fed, focus will return to data releases including Purchasing Managers Index on Thursday. On Friday, we will get July’s Non-Farm Payrolls and Employment Situation. We get JOLTS Job Openings and Conference Board Consumer Confidence later at 10AM.
What to Watch Today…
- Fed & Bank of Japan on Wednesday
- Bank of England Thursday
- U.S. Unemployment, Factory Orders on Friday
- Monex USA Online is always open.
EUR ⇓
The Euro is down and could see further decline following disappointing economic figures suggesting the European Central Bank will need to accelerate its plans on stimulating the Euro-zone. Q2 Gross Domestic Product readings for Germany surprised with an unforeseen contraction, keeping the monetary area from advancing as a whole. Spain and France were able to pull off better-than-expected figures, but economists have reason to be concerned after Germany has also pushed for fiscal aid to boost its anemic situation post-pandemic. GDP for the Euro-zone as a whole came in at 0.3% vs 0.2%, but with Germany being the largest economy and failing to flourish, the shared currency is being held back from gains. Consumer Price Index will be out tomorrow.
MXN ⇓
The Mexican Peso is falling this morning as a result of the economy showing signs of softening more than anticipated. Second quarter GDP for Mexico came in at half the expectation at 0.2% vs. 0.4% estimated. With fundamentals a little shaky and the carry-trade appeal fading as Japan looks likely to be more “hawkish” in the future, the “Super Peso” seems a story of the past with this year showing Mexico has vulnerabilities regardless of its trade importance and benefits from “Near-shoring.” MXN is down by 8.6% thus far this year.
