Daily Market Update

USD Recovery Continues; Kiwi Slides 1.0%

August 31, 2017

The U.S. dollar looks to end the month on the front-foot, gaining across nearly all of its major counterparts overnight. The greenback fell to its weakest level in over 2.5 years early Tuesday morning before staging a big comeback throughout the rest of the week.

USD

The U.S. dollar looks to end the month on the front-foot, gaining across nearly all of its major counterparts overnight. The greenback fell to its weakest level in over 2.5 years early Tuesday morning before staging a big comeback throughout the rest of the week. Yesterday’s dollar strength can be attributed to an economic docket that painted a rosier picture for the U.S. economy. The second reading of Q2 GDP was upwardly revised and ADP private jobs data is foreshadowing a decent Non-farm payrolls number on Friday. The dollar-positive momentum remained in overnight trading as events abroad led to an uptick for the greenback.

This morning’s economic data is unlikely to stifle the greenback’s gains. U.S. consumer spending rose 0.3% in the month of July, slightly missing expectations. However, an upward revision to June’s number means it is a relative “push.” Personal income slightly beat economist’s expectations. A separate report showed that inflation pressures remain low. The PCE Deflator, the Fed’s favorite inflation reading, showed that prices only increased 0.1% on a month over month basis. Later, Chicago Purchasing Managers, Bloomberg Consumer Comfort and pending home sales will cross the wire.

 

EUR

The Euro continues to fall against the U.S. dollar after touching its strongest level since January 2015 earlier this week. The overnight move lower came after it was reported that some European Central Bank officials are concerned about the currency’s strength. We touched upon this speculation yesterday. If ECB President Mario Draghi decides to address the currency’s strength at the next central bank meeting in early September, traders will likely view this as “verbal intervention.”

The economic docket was also mixed for the Eurozone. Eurozone CPI came in slightly higher than expected and the EU unemployment rate held steady at 9.1% in July. However, German retail sales and unemployment missed estimates which show some small headwinds for the EU’s largest economy.

 

NZD

The New Zealand Dollar was the biggest loser overnight, falling an additional 1% against the U.S. dollar. The “Kiwi” is nearly 5% lower versus the greenback this month. Business confidence dipped in August versus July, which sent the New Zealand dollar lower. The Kiwi also reacted to political news after a poll showed that the Labour party, the main opposition party, overtook the ruling National party.

 

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