The U.S. Dollar is trading in stronger ranges this morning, mostly succeeding in reversing the losses it experienced yesterday.
Overview
Risk aversion has taken hold of the market as analyses of the recent deterioration in data for the U.S. economy are worrying investors that assets could be due for some downward readjustment. In general, companies explain that they see less demand for their products and no longer lack inventory. Manufacturing is particularly slow, as yesterday’s indicators by the Institute for Supply Management. At the same time, spending has slowed down, a sign that prices have reached intolerable levels across various income levels.
Markets feel that the Fed will not act to aid economic woes until the fourth quarter but with chances of a cut at their September meeting just at 50.0%. Factory Orders for April are due to be released later at 10 AM, but the prior month’s numbers have already been revised down from an original reading of 1.6% to half of that at 0.8%.
We will see if Durable Goods Orders also have the same issue. JOLTS Job Openings are also due at the same time with economist forecasting April to be a third month of consecutive decline. Tomorrow, we will get May’s ADP Employment Change and S&P Global Purchasing Managers Index.
What to Watch Today…
- ECB Meeting Thursday
- U.S. Employment Situation Friday
- Monex USA Online is always open.
EUR ⇓
The Euro fell after having reached its best level over the Buck since mid-March. Without any data to aid its resurgence until tomorrow, the Euro will not have a chance to regain until the release of PMIs, Retail Sales and Producers Price Index. On Thursday, the European Central Bank is expected to make a cut and announce plans for making another move until the fourth quarter. Sour markets may keep the dollar buoyant today just as a source of safe haven.
MXN ⇓
The Mexican Peso has plummeted to its weakest point against the Buck since the end of October last year as the negative reaction to the elections result continues. As explained in previous notes, incoming President Claudia Sheinbaum has a supermajority in the legislative chamber that brings immediate concerns about the lack of checks and balances on the Morena party’s potential agenda for major reforms.
Businesses are worried about the ability to continue to improve wages while also coping with increased violence and control by drug cartels across various regions. Sheinbaum’s speeches have sounded very conciliatory and fomenting unity. There is still no sign that Mexico will deviate from its current status so if fundamentals remain stable, things could turn around quickly for MXN. We will get Consumer Confidence tomorrow as well as CPI readings on Friday.
