The U.S. dollar slid slightly overnight but the trading mood would best be described as “sleepy.”
The Dollar Index is set for its third weekly gain which can be attributed more to developments in Turkey than strong domestic economic data.
Even in the middle of the dog days of summer, we still have plenty of developments to monitor. Focus will remain on possible trade talks with China and NAFTA negotiations are still underway. The Turkish crisis remains far from solved as U.S. Treasury Secretary warned the country would face more sanctions if it refused to release a detain American pastor. As such, expect downward pressure to remain on emerging market currencies and risk-currencies such as the Australian dollar.
There is no major economic data set for release today. Second-tier University of Michigan consumer confidence will cross the wires at 10 a.m. We believe that Bloomberg sums up today best: “Unless you are an emerging-market currency trader, probably a good day to book a long lunch.”
The Euro is slightly higher again this morning, marking the third day of modest gains in an attempt to pull itself up from a 14-month low.
Eurozone consumer prices were finalized at 2.1% year over year, slightly higher than the forecasted rise of 2.0%. Inflation is currently near the European Central Bank’s target so there will be little pressure on the central bank to raise interest rates. The release appears to have had little effect on the EUR/USD pair.
EUR/USD is down 2.7% so far in August.
The British pound popped higher briefly yesterday following decent data but was unable to hold onto its gains. The sterling was flat overnight but the beleaguered currency is headed for its sixth weekly loss, which would be the longest losing streak since 2015. According to analysts, the fear of a no deal Brexit has outweighed the Bank of England’s dovish rate-hike and the prospects of tighter policy in the future.
GBP/USD is only 30 basis points higher than the one-year low touched on Wednesday.