The U.S. dollar continued to sell-off yesterday, especially near the European close. Overall, the greenback fell for a fifth straight month in July, the longest losing streak since 2011. The U.S. dollar has been on the defensive since the spring as political risk and stagnant economic data on our shores was compared to increasingly hawkish foreign central banks and more optimistic outlooks abroad.
This morning’s economic data will likely keep the greenback down. Consumer spending lost momentum in June, registering only a 0.1% uptick, down from 0.2% in May. The Commerce Department only reported that personal income held flat at 0.1% in June. The print missed estimates of a 0.4%.
Later, ISM and Markit will release their manufacturing surveys but will likely be overshadowed by this morning’s income and spending numbers. There is a slew of other data slated for this week including factory orders and service ISM. The headline risk event is Friday’s Non-Farm payrolls. Economists expect that the U.S. economy added 180K jobs in July, down from 222K in June.
The Euro temporarily halted its run against the U.S. dollar overnight as traders search for a top. The common currency gained nearly 4.0% against its American counterpart in the month of July as speculation grew that the European Central Bank would begin pulling back its quantitative easing later this year.
The Euro stumbled overnight even after data showed Euro-area gross domestic product rose 0.6% in the second quarter, meeting expectations. Eurozone GDP grew a modest 0.5% in the first quarter. Nevertheless, the EUR/USD remains within half a percent of its strongest level since January 2015.
The Japanese yen tested fresh highs against the U.S. dollar overnight, before relinquishing those gains. Overall, the yen opened this morning unchanged from last nights close. Despite rising global equities, the safe-haven yen remains in play as tensions over North Korea increases demand for the currency. Last week, North Korea fired a missile which caused increased tensions between China and Japan and tweets from the American commander-in-chief. The yen is currently at its strongest level against the U.S. dollar since early June.