The U.S. Dollar is trading in stronger ranges across the board to start a week that will be mostly characterized by central bank announcements.
Overview
Domestically, traders and investors are looking forward to Wednesday as the Federal Reserve is expected to assess recent data releases and telegraph their move to cut interest rates in September. Although there is growth in the U.S., there have been a few voices calling for a cut prior to further deterioration of labor and other items that signal recessionary pressures may arrive. Former New York Fed President Bill Dudley even penned an Op-Ed article on Bloomberg expressing desire to start reducing borrowing costs now.
Dudley, as do other economists, is worried that the labor sector has demonstrated weakening along with consumption for lower incomes that could put the economy at risk. Meanwhile, the rest of the globe must cope with effects from increased tensions in the Middle East as well as gold and bitcoin increase in prices with renewed interest in using them as hedge if a change of the guard comes in November.
We will know a decision by the Bank of Japan as they make their decision Thursday morning prior to the Fed while Thursday we will see if the Bank of England indeed cuts into its interest rates. That day will also be important as U.A.S tariffs are scheduled to increase on an array of high-end Chinese imports. The week will close with Factory Orders and further look into U.S. Unemployment.
What to Watch Today…
- Euro-zone CPI, Tuesday
- Fed & Bank of Japan on Wednesday
- Bank of England Thursday
- U.S. Unemployment, Factory Orders on Friday
- Monex USA Online is always open.
GBP ⇓
Sterling has fallen to the dollar in recent days as traders basically guarantee that the Bank of England will start cutting into borrowing costs on Thursday. Recent changes in government leadership include plans to stimulate the economy, but nothing will make a bigger impact than a looser policy path by the BOE. Pound’s value has already paid a toll by erasing gains that had helped it reach its best level in a year. Although there have been struggles and there is uncertainty about what the government will do to energize the economy, Gross Domestic Product has been on the rise and a confident Andrew Bailey could make for a “hawkish cut.”
JPY ⇓
The Japanese Yen has climbed by almost 5.0% thus far in June as the month awarded the currency after the Bank of Japan intervened in FX markets. Additionally, speculation has been brewing that central bank decisionmakers see room for increasing interest rates as the economy has found steadiness and price-growth has not gone away. Wednesday could result in fueling the Yen rally further as chances for a hike to its rates stand at 60.0%. We are still experiencing the strongest JPY over the Buck since the start of May.
