The U.S. Dollar is trading in dominant ranges as the globe reconsiders the high likelihood of a recession with the ongoing weight of war and perpetual supply-chain woes.
Overview
In a major hit to the outlook of the economy, China’s “Zero-COVID” policy is once again being tested as Shanghai looks to shut down once again after just coming out of a 2-month lockdown. The negative effects have been documented plenty, but some new cases are making officials follow protocol. For the past 2 years, China has been isolated from the rest and the impact on the globalized system cannot be ignored. Additionally, the energy crisis sparked by Russia’s invasion of Ukraine does not have an easy end in sight.At this moment, the buck is at its best levels in decades and hit all-time records against some emerging-market currencies such as the Colombian Peso. All currencies except for the Yen are suffering ongoing drops currently. In terms of data, we will see Purchase Managers Index figures for June at 9:45 AM, JOLTS Job Openings at 10 AM, and the FOMC Minutes from the June 15th meeting at 2 PM. The pessimism is almost too much to bear as finally the fears are manifesting themselves.
What to Watch Today…
- FOMC Minutes 2 PM
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EUR
The Euro has hit fresh new 2002-lows as the energy crisis seems like a brutal challenge to overcome. The economy cooling down all across the EU since the start of the invasion is showing itself in the value of the shared currency even as European Central Bankers look to change their monetary policy to begin an era of no negative interest rates.
Natural Gas prices exploding sevenfold and the lack of a clear future where the supply chain is eased has sunk the Euro against our forecasts for appreciation. It is the darkest of times and we hope there is only room for recovery, but these are the breaks.
GBP
Sterling has fallen and hit fresh new lows since the first quarter of 2020. The news from the other side of the Atlantic is that Prime Minister Boris Johnson will remain in power and just put in place new cabinet members after his Minister of Health and Chancellor of the Exchequer resigned. Indeed, the situation is awful aesthetically as the globe questions the stability of England’s leadership.
A series of scandals have forced even the closest of allies to reprimand the Prime Minister and lose confidence in his ability to govern.
