Daily Market Update

USD Buoyant Ahead of Powell Testimony

July 09, 2024

While the United States dollar started yesterday’s session lacking a clear direction, the odds turned in its favor through the afternoon, and the USD started this morning on the front foot against most major currencies.


While the general market mood yesterday remained quite buoyant after election risk in France and the UK was taken off the table, today’s focus has shifted back toward inflation ahead of Fed Chair Jerome Powell’s semi-annual congressional testimony due to begin at 10 am today. Fed voting members Barr and Bowman are also scheduled to speak today.

Markets have come to the consensus that Friday’s labor data from non-farm payrolls was indeed soft, and for good reason – though June’s reading was relatively strong, May’s figure was revised downward substantially, and the unemployment rate ticked up to 4.1% from 4.0%. In reaction, traders will be paying very close attention to Powell’s testimony today and tomorrow to see if he gives any hints on the timing of interest rate cuts this year. His appearance in Sintra last week struck a cautiously positive tone, and in response, USD posted its first weekly loss in nearly two months. Expectations are largely for more of the same tone from Powell, with the possibility of him leaning slightly further toward the dovish end of the spectrum. The Fed has long stated its desire for a softer labor market, and recently it looks like they might be getting it. Though Powell will also likely emphasize that the fight against inflation is not yet finished, we could see this morning’s USD-positive move shift and retrace as he testifies through the afternoon and into tomorrow.

Powell is the biggest market focus today and Wednesday, but he is followed by US CPI data for the month of June due out Thursday morning. Currently markets expect the annualized figure to show a slight decrease from last month’s reading, but core inflation is expected to stay sticky at 3.4%. US PPI will also be released Friday morning.


What to Watch Today…

  • Powell Congressional Testimony, Tuesday & Wednesday
  • UK GDP, Thursday
  • US CPI, Thursday 8:30AM
  • US PPI, Friday 8:30AM
  • Monex USA Online is always open.

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The single currency, after initially gaining a bit of ground against USD yesterday morning, reversed course through the session and is now about two tenths of a percent weaker than Friday’s closing price. Markets initially reacted positively to France’s political news, but now it appears the reality of the situation is beginning to sink in – that an election-winning coalition (or rather, a coalition to not lose an election) may not make for a functional governance coalition and a hung Parliament looms on the horizon. Moody’s published a note early this morning stating that France’s sovereign rating outlook could be lowered from stable to negative should the nation’s fiscal situation materially worsen.



Japanese Yen, after initially gaining a bit of ground back in the Asian trading session, has slipped back and is now flat against USD even after wage data was released that seemed to support an interest rate hike from the Bank of Japan. Annual labor cash earnings showed an increase of 1.9%, and scheduled full-time pay rose as much as 2.7%. Market odds on the Bank of Japan’s action at its July 31 meeting are currently split fairly evenly between a hold and a 10 basis point hike, so it’s possible JPY finally finds some support then.


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