The U.S. dollar continued its momentum from yesterday’s session overnight.
The Bloomberg Dollar Index rose for a third straight day, which can be attributed to two days of mostly positive testimony by Federal Reserve chief Jay Powell. However, Mr. Powell did warn that further escalation in trade tensions would disrupt his current rosy outlook for the economy.
The Japanese yen touched its weakest level in six months, despite a slight safe-haven bid yesterday after Trump’s top economic adviser blamed China for holding back talks to resolve trade tensions. The Australian dollar slipped overnight, giving up all of its gains from yesterday after a report showed employment rose in June.
The economic docket should allow the U.S. dollar to hold on to its gains. Weekly jobless claims registered at 207K, less than the 220K expected. A separate report showed the Philly Fed improved to 25.7, beating expectations of 21.5. There is no further data set for release today.
The Euro fell again against the U.S. dollar and has erased all of its modest gains from the beginning of the month. EUR/USD is now at a 3-week low. There were no major economic releases in the Eurozone overnight, so the Euro’s weakness can be attributed to general U.S. Dollar strength
The British pound slumped again overnight and reached its weakest level since September 5th, 2017. Retail sales for June excluding fuel fell 0.6, failing to meet meager expectations of a 0.1% bump. Sales including fuel fell 0.5%, also missing expectations. As a result, traders are scaling back interest rate expectations for the Bank of England which is dragging the sterling lower. Odds currently sit at a 78% chance of a rate hike on August 2nd. But that number is down from 84% on Tuesday and 89% on Monday.