The U.S. dollar declined overnight and has mostly limped to the end of the month.
The Dollar Index is headed for its first monthly decline in five. Overall the Index is poised for its biggest drop since January 2018. There is plenty on today’s docket to spark some volatility but many analysts point to end-of-quarter rebalancing for some of the movement.
This morning’s data was mostly positive but has yet to help the greenback. The Fed’s preferred inflation measure showed price pressures ticked slightly higher in May. While inflation is still under the Fed’s goal, a trend of higher price pressures could eventually take the pressure of the central bank to make several rate cuts this year.
A separate report showed that personal income came in higher than expectations and matched gains seen in April and personal spending disappointed, but April’s reading was positively revised.
The G20 Summit began in Japan today but big show will be tomorrow when President Trump and Chinese Xi Jinping meet to try to hash out a trade deal. While there is optimism in the air, we aren’t buying it just yet. The top American and Chinese negotiators met today to hopefully pave the way for a successful meeting tomorrow.
What to Watch Today…
- G20 Summit continues in Japan
Complete Economic Calendar can be found here.
The Canadian dollar has been on a tear against its American counterpart this month. The loonie has been buoyed by diverging monetary policies and a rise in the price of oil. The Canadian dollar was unable to extend those gains this morning following the release of a neutral gross domestic product report. Nevertheless, the loonie is poised to close the month up 2.5% against its American counterpart and near the strongest level of the year.
Sterling recovered somewhat overnight but will end the quarter at the worst performer among G-10 currencies. GBP/USD came under massive pressure after leaders failed to secure a Brexit deal and kicked the deadline back until Halloween. In addition, Theresa May announced that she would resign adding to the uncertainty. The current front-runner to replace May, Boris Johnson, has put a no-deal Brexit back on the table, causing the sterling to flounder.