The U.S. Dollar keeps rising as it hit its best overall level per the Bloomberg Dollar Spot Index.
Overview
The U.S. Dollar keeps rising as it hit its best overall level per the Bloomberg Dollar Spot Index. Global markets continue to ride a slump with declines all across the board as a confluence of issues makes for a very poor economic outlook. The International Monetary Fund and other institutions are once again downwardly revising their forecasts for the remainder of the year and beyond.
Additionally, second-quarter earnings for large banks and other firms are revealing further evidence of an economy hitting some turbulence beyond pandemic obstacles. It is very clear now that the supply-chain surge in prices, as well as trading obstacles on many fronts, are causing more problems than anticipated.
Central banks certainly do not hesitate to stay on course and fight inflation the one way they know how: by increasing interest rates and hoping it cools down activity. The Bank of Canada surprised with its hawkishness yesterday, which only put more pressure on the Fed to implement a quicker pace to increase borrowing costs.
Producer Price Index figures this morning for June further showed that suppliers are indeed facing major costs with the final PPI year-over-year figure going from 10.7% to 11.3%. Traders are certainly placing bets the Fed will need to do a 1.0% increment instead of just another 75-basis-points when they next meet on July 27th.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The shared currency is facing its biggest challenge yet since it started integrating itself as part of the global economy in the early 2000s. Without a doubt, the energy crisis only exacerbates issues with economic growth that emanated from the pandemic as well as political friction. No clarity over energy and the obvious divergence in central bank policies at the moment serves no other purpose than to crush the Euro. We shall see just what the new resistance and support levels can be in a very chaotic time on the other side of the pond. As mentioned in our monthly outlook, Italian instability is coming at a very inopportune time for continental survival.
CAD
The Canadian Dollar is trading around its weakest levels since November 2020, despite the aggressive move by the Bank of Canada to hike its main interest rates by 100 bps, a full percent. These steps have only encouraged bets that the Fed will need to follow suit and perhaps keep a much quicker pace than previously foreseen. Oil prices as well as other commodities keep heading downward in price thus lumping the “Loonie” together with the devastation for all currencies against the greenback.
