The U.S. Dollar is currently losing ground all across the board following data releases suggesting a terrible time for Housing and Construction.
Overview
The Buck’s trajectory has been on a downward spiral, marking a concerning trend with its third consecutive week of depreciation. This is the longest stretch of losses the currency has faced in over five months, signaling potential unease in the market. The catalyst for this decline appears to be the latest housing market data, which revealed a significant slump in new-home construction. This drop to levels not seen since the initial economic impact of the pandemic suggests a market reacting to an oversupply of inventory coupled with a decrease in buyer demand.
Despite a robust start to the week, the equity markets lost momentum, with the S&P 500 teetering on the edge of ending its six-day rally. Adding to the economic caution, Austan Goolsbee, President of the Federal Reserve Bank of Chicago, voiced concerns regarding an uptick in unemployment rates and other leading economic indicators that point towards a decelerating economy. We shall see if confidence is also down with the University of Michigan Consumer Sentiment Survey for August out at 10 AM.
What to Watch Today…
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MXN ⇑
The Mexican Peso (MXN) has been experiencing a period of stagnation, with the currency oscillating between minor gains and losses. This pattern of indecisiveness comes as traders opt to secure profits from their recent bullish positions. The Peso’s lack of direction follows a notable 2.5% surge over the past few days, a rally fueled by a shift in risk sentiment among investors. However, the current pause in the Peso’s ascent suggests a momentary consolidation as the market digests the recent gains and traders reassess their positions in anticipation of the next market catalyst. That could arrive next Thursday in the form of the final reading of Gross Domestic Product growth for Q2, which originally came in at a measly 0.2% after stellar quarters prior. If the number is revised downward or somehow upward, there will be a strong reaction.
EUR ⇑
The Euro experienced a rise, increasing by 0.2% against the declining dollar. Two days ago, it peaked for the week and managed to reach its best value since January. This increment is reflective of a broader trend where the dollar has lost ground against most of its significant counterparts. Next week, the shared currency will be more vulnerable starting Tuesday with the release of the Consumer Price Index for July and later in the week seeing the Purchasing Managers Index as well as confidence gauges.
