The U.S. Dollar is finally dwindling following a tumultuous week for global growth outlooks.
Overview
Equities and commodities have seen their prices decline as the effects of tighter monetary policy make a dent on the economy. The debate across market participants is about how deep recessionary pressures will be and how prolonged if the doom materializes. The Fed may continue to stay on a hiking path, but now the question is about officials’ willingness to raise by 75 or 100 basis points. Will inflation really slow down and prove them right in their measures?
Today’s data showed that economic momentum in the U.S. is more impressive than expected. June Retail Sales advanced by 1.0% for the month over 0.7% estimated. Meanwhile, Empire Manufacturing survey results were expected to be a negative reading of (-2.0) indicating pessimism yet it came out at a healthy 11.1, thus painting a less gloomy picture. We will get Industrial Production at 9:15 AM and the University of Michigan Sentiment at 10 AM. It could be a day of buck losses as the markets look for perhaps a better end to the week.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro is trading in stronger ranges this morning following a week that saw it drop to its weakest point since the early 2000s when the shared currency was just entering world markets. As far as the Italian government is concerned, there is certainly confusion about how to take the fact that President Sergio Mattarella rejected Mario Draghi from resigning from his Prime Minister post. Italian assets have all taken a hit, yet the markets are not punishing the Euro as this all gets sorted out. Per Draghi, he had no coalition to continue governing, but we will know more over the weekend.
GBP
Sterling is also marching upward following a week that witnessed the beginning of campaigns to replace Boris Johnson as PM. Additionally, economic woes are building as the U.K. faces legal issues over trade with the EU and Brexit analyses have concluded that the economy seems less competitive after the agreement to leave the single market. The challenges to the global economy seem insurmountable at the moment, but the risk-aversion accompanying a strong dollar is vulnerable in a world mostly blurred with uncertainty that welcomes any piece of good news.
