The U.S. Dollar is trading in mostly tight ranges following a week of some gains from fears surrounding the health of the global economy for the second half of the year.
Overview
Data from China has revealed a concerning slowdown, but much of the negative influence on this has calmed as traders and investors look towards heavy stimulus plans. Inflation continues to be a focus worldwide, with the armed conflict only exacerbating issues with the energy and food trade, particularly as once fertile soil is now covered in trenches and battles.
It all plays into a mix of volatility and mixed guidance for the Dollar, which has maintained a steady streak of appreciation since the middle of July, representing over 2.5% in recovered value. For the month, July marked a 1.2% overall loss for the buck, but the tables have changed thus far in August.
Earlier, the release of Producer Price Index figures for July showed a higher expansion than expected at 0.3% over the 0.2% estimate. Unlike Consumer Price Index numbers, there were no signs of disinflation, but we doubt the effects will play that strong a role in lifting the buck. The Fed already seems determined to stay on a tightening path, but the thing to watch is how officials downplay the need for hiking interest rates any further. Chances for a hike in November have surged from 20.0% to 25.0%.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
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GBP ⇑
Sterling is on the rise, but barely, following data this morning that managed to paint a better scenario for the U.K. situation than was forecast. Gloomy expectations of 0.0% GDP growth or worse for Q2 did not come to fruition, instead, it registered a quarterly 0.2% advance while doubling the yearly average from 0.2% to 0.4%. Additionally, Industrial Production for June climbed a whopping 1.8% vs. 0.2% expected, while Manufacturing also surged unexpectedly by 2.4% vs. 0.2%. It seems like, as we discussed this week, that the U.K. pulled off yet another surprise that defuses some of the biggest concerns about it sinking into a painful recession. Thus far, Pound gains are quite limited.
MXN ⇑
The Mexican Peso is the biggest mover this morning, gaining over half a percent this morning following the reaction to the monetary decision by Banxico, the central bank. The benchmark interest rate remains at 11.25% after officials chose to remain at the level without any intent to cut. Banxico members have not raised rates since March, but unlike other LATAM central banks, it has gauged that the economy is resilient enough to avoid cutting into record-high borrowing costs.
