Daily Market Update

4th of July Holiday does not Cause Major Havoc or Victory for U.S. Dollar

July 05, 2017




The U.S. Dollar remained mostly flat throughout the 4th of July holiday, neither gaining nor losing momentum as geopolitical risks once again force markets to reassess the potential dangers of a nuclear–armed North Korea. Reports mention that the most recent test could demonstrate long-range capabilities, which alarms those who believe a missile could even reach Alaska. Japan and China will be monitoring things closely and the world will await an American response.

Economically there are a few things on the able that could impact FX markets. Factory Orders will be released at 10AM to gauge if production once again contracts. May’s figures are set to disappoint at half a percent reduction, thus why anything less dire or surprise expansion could move the buck. The FOMC minutes will be out at 2PM, see if we find anything interesting from the last meeting.  



The Euro is holding around its best levels since last summer after good news on the unemployment situation is Spain. A member of the troubled quartet since the financial crisis known as the P.I.G.S. (Portugal, Ireland, Greece, and Spain), the Iberian nation has lowered its jobless rate to an eight-year low. The recovery has been slow, but as the fourth largest economy of the Euro-bloc, this showcases that the health of the monetary union rests not only on Germany or France.

Producer Prices had fallen did show some signs of contraction, which could serve the argument that the European Central Bank does not need to worry about tightening in the midst of heightened levels of inflation. The Euro will depreciate in the next few months if prices do show major slack, reducing chances of ECB tightening.  



The Pound fell from a six-week high only because the dovish voices of the Bank of England have stepped in to give their two cents. Ian McCafferty, an official that voted against hiking, believes strongly that the bank needs to be “prudent” in their approach. In his assessment, it would be dangerous to hike too early instead of holding off and increasing rates slightly late.

Retail numbers and construction figures also disappointed, highlighting the inconsistency of a Brexit-anxious economic reality. The dollar has stopped the bleeding for now.   .

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