The U.S. Dollar is starting the week benefitting from a cautious mood as Europe and the U.K. are off in observance of Labour Day.
Overview
After last week’s milestone of breaking the strongest level in five years, the buck is currently around its best levels since 2020 following some losses Friday.
Nevertheless, the buck is a safe-haven staple at a moment of war uncertainty as it is intensifying while China remains neutral and continues to economically affect the globe’s productivity. The supply-chain woes are ever-increasing from shutdowns related to China’s determination to eliminate COVID.The major risk event of the week comes in the form of the Fed decision Wednesday, one that will test the Fed’s will to increase interest rates significantly this year. Following last week’s indication that certain items of the economy are helping contract growth, there will be serious questioning during the press conference, which will be the first in-person since the pandemic safety precautions took place.
We will get to chew a little bit of data in 10 AM releases of March Construction Spending, expected to expand by 0.8%, and the Institute of Supply Management’s Manufacturing gauge for April, supposed to be better than March.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro has been trying to get away from its weakest levels since 2017 as the continent tries to handle the new reality of a prolonged war that will require adjustments to energy imports. The EU is likely to complete an energy embargo by end of the year, thus revising all outlooks for member nations as growth is compromised. Ultimately, the chaos has finally sunk EU-area Economic Confidence to its lowest point in a year.
CAD
The “Loonie” seems doomed for the short-term as commodities fluctuate wildly and oil prices dwindle based on the economic havoc created by the ongoing conflict. The negative effects are certainly spreading all across the board at the time of writing. We predict a mostly quiet Monday, but the mood is turning sour following data from China’s manufacturing and Services sectors plummeting to their weakest levels since the pandemic started. Additionally, the world’s second-largest economy is thinking it will continue to add stimulus to the struggle.
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