After taking heavy losses through yesterday’s trading session against most majors, the United States Dollar is weakening across the board again this morning.
Overview
Yesterday’s data releases of JOLTS job openings and US consumer confidence proved to be more consequential than expected, and both came in substantially under expectations. It seems the hot US labor market is finally beginning to cool down – the rate of job vacancies to unemployed workers fell to 1.51, its lowest point in nearly two years. With consumer confidence also falling, the odds of another rate hike from the Federal Reserve are down once again.
On top of that, this morning’s big news: US GDP in the second quarter of this year grew at a rate of 2.1%, well below the 2.4% expected and the previous quarter’s reading. This is, yet again, a further significant indicator of a cooling economy. ADP employment change also showed the US added fewer jobs this month than expected, and personal consumption is down as well. Though Fed policymakers have been read as likely to hold rates steady this month for some time, they are also due to deliver new quarterly forecasts, which will impact pricing for November’s meeting. Equities in the US are expected to open higher on the news, and global stock indices are largely positive in overnight and European trading.
Still to come this week is the Fed’s preferred inflation gauge of PCE tomorrow and US employment data Friday. If the releases so far this week are any indication, USD may continue to face weakness to end the month and snap August’s winning streak.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
GBP ⇑
Despite news of a real estate sector in crisis, the Pound Sterling is gaining against the USD this morning as signs of softening in the US economy provide most global currencies with a boost. Mortgage approvals plunged in the UK, down to just 49,000 in July. This is undoubtedly a harsh warning sign for the greater state of the UK economy as the cost-of-living crisis rages on in the nation. Despite this news, the Bank of England is still expected to hike interest rates at least twice more this calendar year, and no easing is expected any time soon, contrasting with the Fed and giving GBP upside for the remainder of this quarter.
EUR ⇑
The single currency has been the big winner against the USD yesterday and into this morning after CPI released from several Eurozone nations showed inflation is definitely sticky throughout the region. Spain and Germany, in particular, posted figures pointing to a reacceleration of inflation, leaving the door wide open for the European Central Bank to raise interest rates at least once more this year. Figures for the full Eurozone are due out early tomorrow morning, and we expect markets to respond in kind and continue to boost EUR prices.
