Running the risk of sounding like a broken record, the U.S. dollar held tight ranges overnight.
Indeed, the Bloomberg Dollar Index gained only 0.1% against its G10 partners. Trading volumes remain low this summer.
NZD/USD did provide some excitement overnight, with the Kiwi falling as much as 1.5% before recovering some of its losses. The Reserve Bank of New Zealand pushed back its forecast for an interest rate hike back to the second half of 2020, reducing demand for the pacific currency. The Kiwi is at its weakest level in more than two years against the U.S. dollar.
The domestic economic calendar once again has failed to produce data that can shake the greenback out of current ranges. Initial jobless claims registered at 213K, basically in line with expectations of 220K. The producer price index was unchanged in July as the cost of services fell. Economists had expected a 0.2% month over month increase after a 0.3% increase in June. Excluding food and energy, however, the gauge ticked 0.1% higher. Yearly PPI that takes out volatile sectors like food, energy and trade services, shows prices have risen 2.8% on a yearly basis. The consumer price index will be released tomorrow and we will be assessing if higher producer prices are being passed on to the consumer.
The Euro remained quiet against the U.S. dollar but briefly touched a 12-month best against the British pound. The common currency rose yesterday after falling against the greenback earlier in the week but the overall range has held under 1.0% so far this month.
The ECB’s Economic Bulletin said that the economy was proceeding a long a “solid and broad-based growth path” but uncertainties in the form or protectionism (tariffs) remain prominent.
The British pound rose slightly, halting a five-day slide that saw the currency fall to a 12-month low against the U.S. dollar and Euro. There was no fundamental data released to give the sterling a reprieve. Rather, the modest support for the sterling appears to be technical as GBP/USD bounced of a strong Fibonacci level.
Trade, industrial production and GDP are all set for release tomorrow in the U.K.