Daily Market Update

U.S. Dollar Slips as Volatility Remains Muted

August 23, 2016


The U.S. dollar was unable to hold its gains from yesterday’s trading session overnight.  The greenback popped higher yesterday after the Fed’s Vice Chairman Stanley Fisher said the economy is close to meeting the central bank’s goals.  The movement lacked any staying power as the greenback fell against 14 of its 16 major rivals overnight.

The economic docket is fairly light today, but New Home Sales at 10 a.m. could push the dollar into a more definitive direction.  Overall, however, volatility across all market sectors has been subdued over the past weeks, which is not unusual for August.

That could change during the second half of the week where a slew of data (GDP and Durable Goods) and an important speech by Fed Chair Janet Yellen on Friday are likely to set the tone for the greenback heading into the autumn.


The Euro has remained out of the limelight most of the month as much of Europe is closed for its summer holiday.  However, data released today showed that the economy of the bloc is weathering the effects of the Brexit nicely.  According to HIS Markit, the Purchasing Managers Index rose for a second month to 53.3.  Service PMI also registered above 50, indicating expansion.  The data was not all roses as Germany’s manufacturing sector cooled and France’s manufacturing data remained below 50.0. Germany and France are the Eurozone’s two biggest economies.


Commodity-based currencies, as a whole, are up this morning despite the price of oil trading lower following yesterday’s 1.0% drop.  WTI jumped 9.0% last week on speculation that informal talks among major producers will bring about an output freeze.  However, the price of black gold has retraced 2.0% of those gains in the first day and a half of trading this week.
Metals from silver to zinc advanced, giving a lift to the South African rand and Aussie dollar.

The biggest mover was the New Zealand dollar, which rallied after Reserve Bank of New Zealand Governor Graeme Wheeler said that while he intends to lower interest rates further to revive inflation, a series of rapid cuts is not justified.

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