The U.S. Dollar is trading in stronger ranges as global markets eased off the panic that took grip of equities yesterday.
Overview
Exchanges across the world are breathing some air following the plummeting of stocks that erased around $6.5 trillion in wealth. Additionally, the odds of Federal Reserve interest rate cuts coming in the next few months have also relaxed, with an outside chance of some emergency meeting to cut rates being left behind as just a yesterday headline.
Investors and traders seem to be digesting a plethora of challenges that only make the remainder of the year more uncertain, with plenty of risky events ahead, such as the November Presidential election. Economic data weakening, earnings coming in low across tech doubts over AI, and the potential for more escalation of armed conflict in the Middle East truly do sour any of the fortunes that have been experienced this year. Nevertheless, the American economy is far from being at risk of collapsing, and labor dynamics may end up surprising even the most pessimistic economists. For now, stocks are mounting a return while the Buck halts its decline.
What to Watch Today…
- Banxico Meeting, Thursday
- Monex USA Online is always open.
EUR ⇓
The Euro is down after having reached its best level since March yesterday as a result of more calm following a disturbing Monday. While concerns over the American economy riled up risk-aversion, today, we are seeing exchanges taking fewer bets that the Fed will need to go on an aggressive path of stimulus. Furthermore, the European economy as a whole is still more worrisome with June Retail Sales coming in at a deeper contraction than expected at (-0.3%) vs. (-0.1%) forecast. Gross Domestic Product for Q2 will be out Thursday. Expect volatility, but today seems like a “Textbook Turnaround Tuesday.”
MXN ⇓
The Mexican Peso continues to struggle ahead of the Banxico meeting on Thursday. Bad times for risk-taking meant a big dip for Peso, which is now trading at its weakest point against the Buck since January 2023. Traders believe that Mexico’s central bank would have to go in tandem with the Fed if here we decide to start cutting borrowing costs rapidly. With political items to monitor as the newly elected government arrives, MXN seems to be in a vulnerable position as it has seen the past two years post-pandemic.
