Daily Market Update

Flat Dollar ahead of GDP data end of week

July 24, 2018

The U.S. Dollar is in quiet ranges, sticking to familiar ranges as markets have their eyes on trade news and political headlines.

USD

The Treasury bond market was solid for the U.S. with yields rising on Fed expectations and an economy that remains healthy. Purchasing Managers Index (PMI) figures will be out at 9:45AM and could certainly add to the image of a consistent situation.

We see little chance of much movement in for the dollar against the majors, but it is clear that other safe-haven assets are gaining as a result of anxiety reflected in down trending stock indexes. Japanese Yen is up 1.7% since last week while the country also copes with some natural disasters related to flooding and a deadly heatwave. There is history of Yen rising in times of domestic trouble that may lead to more investment in re-building.

 

EUR

The Euro found no support from PMI numbers overnight, especially since it was a mixed bag with some countries outdoing expectations while others lagged behind. Manufacturing PMI showed a better than forecast expansion in France while Services and Composite came in below. Germany experienced the same phenomenon, thus bringing down the average for the Eurozone as a whole on the Composite.

The surveys show that there is no strong momentum at the moment, which ultimately signals that the economy is not growing so hot that the European Central Bank needs to step up their tightening stance or plan of action. Divergence with how the U.S. is performing will keep weighing on the shared currency the next few months until a turnaround is seen.

 

GBP

The Pound remains on retreat mode as Parliament gets ready to take a break after today’s session. Regardless, it is still an eventful evening that may present some headlines as new Brexit Secretary Dominic Raab speaks to members of the House of Commons about his role and plan of action.

Additionally, Downing Street announced that an altered Brexit white paper will also be released today, thus giving parliamentary members homework to digest over their holiday. Government will be back in full throttle in six weeks.

 

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