The U.S. Dollar is trading in mostly strong yet familiar ranges with a broad retreat across global markets without significant gains in any one particular asset class.
Overview
All over the board, even the excitement behind bitcoin and crypto has eased with gold being the only true winner as a renewed safe haven. There is caution amongst investors as the positivity behind a stimulus-driven Fed has faded. At the time of writing, the chances of two more Fed interest rate reductions for the remainder of the year stood at just 60.0%. There have been more voices raising concern about the potential for inflationary growth to remain and be a pain for the financial environment.
At 8:30AM economic indicators released were all overwhelmingly improved in contrast with negative expectations, particularly in Durable Goods Orders. The figure for August came in at 2.9% while a contraction of (-0.3%) was estimated. Meanwhile, Gross Domestic Product’s final revision for Q2 showed a 3.8% advance over the previous 3.3.% reading. Labor-wise Initial Jobless Claims for the week also showed less people seeking those benefits. Naturally, the Buck is rallying, but it may be limited as the pressure grows on the Fed to keep slashing and foment easing.
What to Watch This Week…
- PCE Price Index Friday 8:30AM
- University of Michigan Consumer Sentiment Friday 8:30AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
JPY ⇓
The Japanese Yen has fallen in value rapidly recently, trading around its weakest levels since end of July. Domestic stocks are up while Yen is losing its appeal as the mood in Japan seems less driven by austerity and tightening as companies look for potential growth as more spending becomes implemented by the government. Meanwhile, the Bank of Japan may still be able to increase interest rates, but there is now political friction regarding that. The lack of stability and guidance has made for a weakened Yen in the past eight days, marking a 2.0% depreciation.
MXN ⇓
The Mexican Peso has been floundering a bit, already down by over half a percent this morning after impressive U.S. data showing a better-than-expected economic picture. The past week has also meant a drop for Peso and other LATAM, but with Argentine Peso (ARS) being the great exception to the trend by climbing 10.2% since. The quick jump is due to the U.S. administration reportedly hoping to help Argentina and to “bail out” if needed. We shall see how serious the commitment to aiding the nation is, but for now it is making a difference in their tender over all other EM/LATAM alternatives for yield.
