The United States Dollar, though muted this morning, is heading for a weekly loss of about three quarters of a percent as trade and tariff headlines have dominated markets since Monday.
Overview
The Buck’s decline this week was punctuated yesterday afternoon by reports that Stephen Miran is likely to be appointed as a temporary Federal Reserve voting member, replacing Adriana Kugler who resigned last week. Miran would vote on September’s interest rate decision, and there is allegedly potential for his temporary position to become permanent.
Miran, currently the head of the Council of Economic Advisors, has espoused dovish sensibilities ikn the past, tracking with the Trump Administration’s mission to get the Fed to lower interest rates substantially. Reports also surface that current Governor Chris Waller is Trump’s pick for the top spot of Fed Chair next year after current head Jerome Powell’s term expires. As Waller is also quite notably dovish and did vote for a 25 basis point cut at the Fed’s previous meeting July 29th and 30th, such a nomination would fit the bill as well. Easing expectations for September’s meeting had already gained quite significant ground following last Friday’s jobs report, so these reports have had little further impact on either overnight swaps or the Dollar in general. The Administration also clarified yesterday that tariffs do apply to imports of one-kilo and 100-ounce gold bars, a move that directly impacts Switzerland once again as the world’s largest gold refiner. This also threatens to add quite a bit of turmoil to gold futures, long used as a hedge against geopolitical risk and a traditional safe haven.
What to Watch This Week…
- US CPI July, Tuesday 8:30AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
GBP ⇑
Pound Sterling is trading flat against USD this morning, holding onto gains from yesterday’s session after the Bank of England cut interest rates by 25 basis points. Though this easing move was widely expected by markets, the commentary from BoE head Andrew Bailey following the decision was much more hawkish than expected and boosted GBP to its strongest levels in two weeks. Bailey noted that the Bank of England’s easing cycle was likely to be much slower than many previously expected, putting a damper on further easing bets this year.
JPY ⇓
Ahead of an interest rate from Banxico due out this afternoon, MXN is treading water against USD and trading much stronger on the week to date than at Monday’s open. Though Banxico’s policymakers are widely expected to cut their target interest rate by a quarter percent this afternoon, Mexican economic data has continued to surprise to the upside. Year-over-year core CPI, excluding volatile goods like food and energy, grew 4.23% in the last 12 months. Though this is in line with economists’ expectations, it’s still much higher than all G10 economies. A risk-forward environment is also helping MXN and most emerging-market assets this morning.
