The Dollar traded slightly on its back foot overnight. The greenback gained late last week on a strong jobs report, but dovish comments from Federal Reserve members yesterday threw some cold water on interest rate expectations. James Bullard, who is not a voting member this year, argued that interest rates should remain as is for the time being. Minneapolis President Kashkari said that the uptick in wage growth doesn’t mean he is more confident in the inflation outlook. On a day where data releases were second tier, the dovish comments held the greenback down.
Today’s docket is completely void of any significant risk events on our side of the pond, with only JOLTs job openings expected to hit the wire. The President is also on a “working vacation” for the next two weeks and Congress will not be in session again until early September so news out of Washington may be subdued. However, we will be on our toes as the Russian investigation persists and the President’s Twitter account is still active.
Commodity-based currencies are mostly higher and the Australian dollar jumped slightly against its American counterpart overnight as the price of iron ore extended its gains. A report showed that business confidence on the island country rose to its highest level since April.
The South African rand has been the biggest winner overnight as South African President Jacob Zuma faces a no-confidence vote via secret ballot this morning. While the currency is likely to gain if Zuma is outed, we could see a quick and aggressive reversal if Zuma is able to hold on to his power. Results should be out later this morning.
While most European currencies rose against the U.S. dollar, the sterling was the exception. The pound fell for a third straight day versus the greenback as retails sales slowed in July. The British Retail Consortium showed that early retail sales increased only 0.9% last month, down from 1.2% in June. Recent data has showed a softening economy as Brexit negotiations pick up .