After a string of events last week caused the U.S. dollar to weaken, the battered currency faces an uphill test this week to regain some recent losses. The President’s son-in-law Jared Kushner will be testifying in a closed meeting in front of the Senate Intelligence Committee this morning. It is unlikely this event will have a lasting impact on the dollar but we cannot overlook it as Russia headlines drove the dollar weaker last week.
Later this morning, Markit manufacturing and service data will cross the wires, along with existing home sales for June. There is only second tier data set for Tuesday before the week’s headline event on Wednesday, the Federal Reserve’s interest rate decision. According to the Fed Funds Futures, there is zero chance the Federal Reserve will hike rates this week. There is only a 10% chance the central bank will move at its September meeting and a 42% chances they will boost rates by the end of the year.
Durable goods orders will cross the wires on Thursday morning before the first reading of second quarter GDP on Friday. The GDP print represents the first reading of growth and is expected to show a recovery to 2.5% from a dismal 1.4% in the first quarter.
After rallying to over two-year highs last week, the Euro has been able to hold on to most of its gains to start the week. The Euro was unable to extend its gains after a composite Purchasing Managers’ Index for the Euro area fell to the lowest level in six months driven by a slowdown in service. The bright spot was French manufacturing rose at its highest pace in six years. The European economic docket will be light during the beginning of the week before a slew of growth and inflation numbers will be released on Friday.
The British pound was unable to take advantage of widespread dollar weakness as continued uncertainty over Brexit has held the sterling back. The sterling has gained modestly early this week despite the International Monetary Fund’s decision to downgrade the U.K.’s growth forecast this year. The IMF lowered its 2017 forecast to 1.7% growth for the U.K. from 1.6% last year.
The U.K.’s Office for National Statistics releases its second-quarter growth on Wednesday.