Daily Market Update

U.S. Dollar Up Before Big Data Week

August 22, 2016


After a mostly disappointing week, the U.S. dollar is a bit stronger against the majority of its counterparts this morning.  The U.S. Dollar Index rose slightly but remains within striking distance of a three-month low.

The dollar’s rebound comes as the Federal Reserve’s Vice Chairman Stanley Fischer said Sunday that the U.S. economy is already close to meeting the central bank’s goals and that growth will pick up.  The fairly optimistic statement follows New York Fed President William Dudley’s warning last week that investors are underestimating the likelihood of an imminent rate increase.  Odds are now slightly higher than 50% that the central bank will find the scope to increase rates again in 2016. The marquee monetary policy risk event will come on Friday.  Fed President Janet Yellen will speak to economic leaders in Jackson Hole, Wyoming.

There is no major data slated for release in the States today.  New Home sales will cross the wires tomorrow morning with economist expecting a contraction of 2.0% in July.  Existing home sales are set for Wednesday and are also expected to show negative growth. The second half of the week is data rich with Durable goods orders on Thursday morning followed by Service PMI and the first revision of second quarter gross domestic product on Friday.  The first reading showed the U.S. economy grew at an anemic 1.2% in the second three months of the year.


The British pound is slightly stronger from Friday’s close after gaining much of last week.  The Sterling is now nearly 2.0% stronger against the U.S. dollar from its lowest close of the year on Monday.  The sterling found support after a slew of post-Brexit data showed that the U.K. economy may be more resilient than many had thought.  The highlight was a report that showed retail sales grew 1.4% in July, the best reading since 2002.


The Japanese yen remains its yearly high against the U.S. dollar but verbal intervention by Japanese policy makers has stunted the yen’s gains.  Bank of Japan Governor Haruhiko Kuroda told the Sankei newspaper that the Bank of Japan is conducting a comprehensive review of its monetary policy and the Japanese economy.  He also said that there is a “sufficient chance” of more easing at next month’s meeting, putting downward pressure on the yen.  The BoJ meets next on September 21.

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