|Day's Range||96.658 - 96.933|
|52 Week Range||96.329 - 98.665|
Inflation numbers out of the UK will need to jump to hit pause on the Pound’s demise, while U.S retail sales could influence a resurgent Dollar.
Although the CFTC Commitment of Traders report is a lagging indicator and difficult to use over the short-run, it can be a handy trend and contrarian indicator when used correctly with well-established trends or in markets at extreme long-term highs or lows.
The collapse of the Turkish lira spreads its toxic influence on the European and EM financial markets. The Turkish lira has lost 11% to 7.11 per dollar since the start of trading on Monday but somewhat stabilized after the country’s Minister of Finance gave an assurance that the government was working on a draft plan to stabilize the situation.
The Turkish Lira is on the slide again as the Asian markets respond to Friday’s late moves, risk appetite on the slide and the Yen and USD up early.
The New Zealand Dollar closed sharply lower against the U.S. Dollar last week after the Reserve Bank unexpectedly committed to keep interest rates at record lows through to 2020 on disappointing economic activity. The Reserve Bank of Australia wasn’t as dovish as the RBNZ, nonetheless, the Australian Dollar weakened as the central bank showed no intention of raising rates over the near future. The Dollar/Yen was under pressure last week on trade tensions and on revelations the Bank of Japan is under pressure to move away from its accommodative policy. Geopolitical tensions in Turkey drove the Lira sharply lower, causing investors to dump higher-yielding currencies like the Euro, Australian and New Zealand Dollars. Money then flowed into the safe-haven U.S. Dollar and Japanese Yen.
Weighing on equities were worries of financial and currency turmoil in Turkey as well as continued tariff retaliation between the United States and China. U.S. government debt yields plunged on Friday as global credit contagion fears surrounding Turkey encouraged asset managers to aggressively move money into relatively safer assets. Consumer prices continued to rise in July, indicating a gradual increase in inflation pressures and suggesting further interest rate hikes from the Federal Reserve. The Turkish Lira collapsed to an all-time low against the U.S. Dollar Friday even as Turkey’s leader, President Recep Erdogan downplayed the concerns, telling Turks “we have our God.”
On Friday, the U.S. Dollar Index spiked to its highest level since May 17, 2017 after the Euro plunged against the greenback to its lowest level in more than a year as a steep drop in the Turkish Lira sparked a massive flight-to-safety exodus into the dollar.
It’s a big day on the data front, with the GBP, the USD and the Loonie in focus, the Pound in dire need of some positive numbers to ease the pain.
Japan’s economy expanded at an annualized rate of 1.9 percent in April-June, bouncing back from a contraction in the previous quarter, government data showed on Friday, in a sign its recovery momentum remained intact.
The dollar is also being supported because the U.K. can’t agree on a Brexit strategy. The New Zealand Reserve Bank said earlier today that it won’t raise rates until 2020. The European Central Bank is only preparing its plan to end stimulus and Saudi Arabia is signal handedly weakening the Canadian Dollar by ordering money managers to dump the Loonie.
So far, Emerging Markets currencies have been subjected to sanctions or tariffs from the United States. The British Pound is also in the camp of suffered currencies. Currently, Trump sanctions or tariffs are the main catalysts for market volatility.
Double-digit inflation, foreign currency debt, a surge in the cost of imports that Turkey depends upon for any goods that it delivers overseas and Erdogan’s unwillingness to allow the Turkish central bank to raise borrowing costs are a combination that paints a bleak picture and these are all before a possible meeting gone wrong in Washington.
The Dollar finds early support, while the Kiwi slumps on a broadcasted delay to a rate move until 2020. Trade war chatter remains in focus for the USD.
“We expect to keep the OCR at this through 2019 and into 2020, lower than we projected in our May Statement,” RBNZ Governor Adrian Orr said in the opening lines of the statement.
Precious metals take advantage of USD’s weakness amid Sino-US trade wars but upside is limited as investors remain vary of China’s response to latest update from US on tariff for another $16 billion in Chinese goods.
The U.S. Dollar is trading lower against a basket of currencies early Wednesday as demand for the greenback as a safe-haven asset due to concerns over the trade dispute with China seems to be fading amid a stronger offshore Yuan. European equities are trading mixed Wednesday as investors monitor Brexit developments and another round of corporate earnings. Essentially, investors are taking their cues from similar price action in Asian and U.S. markets.
The China trade surplus sees a sharp narrowing as imports surge, with trade war chatter likely to influence, the economic calendar relatively quiet.
Gold prices edged up on a steady U.S. dollar early Tuesday, but expectations for further interest rate hikes in the United States supported the greenback and limited interest in the metal.
Following some disappointing stats out of Germany last week, today’s industrial production and trade figures could add more pressure on the EUR.
A quiet day on the economic calendar leaves the EUR exposed to factory order numbers out of Germany and the USD in Trump’s hands.
The BOJ surprised a few traders on Tuesday when it voted to keep its ultra-easy monetary policy in place in a bid to stimulate inflation, which the central bank acknowledged will likely fall short of its 2% goal until at least 2021. Early in the week, the Aussie lost ground in response to solid U.S. economic data and the hawkish Federal Reserve’s assessment of the economy. The New Zealand Dollar finished the week lower with investors reacting to the escalation of the trade dispute between the United States and China.
A hawkish Federal Reserve helped drive the greenback higher on Wednesday after the central bank gave an upbeat assessment of the world’s biggest economy and stayed on course to gradually lift interest rates. The U.S. Dollar suffered a slight setback on Friday against a basket of currencies after data showed U.S. job growth slowed in July. Additionally, the greenback also slipped against the Yuan after the Chinese central bank acted to stabilize the currency by stemming speculation against it.
In U.S. economic news on Friday, the Labor Department said the U.S. economy added 157,000 jobs last month. The ISM Non-Manufacturing PMI report showed activity in the services sector slowed more than expected in July. The U.S. trade deficit widened in June for the first time in four months as exports fell and imports grew. Trade gaps with China, Mexico and Canada all increased. On Friday, China’s Ministry of Commerce said China is preparing to retaliate in the escalating trade war with tariffs on about $60 billion worth of U.S. goods.