The U.S. dollar showed a small break with its relationship with risk sentiment overnight.
The greenback was able to modestly gain against most of its G10 counterparts even as global equities remain firmly in the green. Some have pointed to “fragile” sentiment for the Dollar’s gains as fresh fears of a second wave dominates headlines, but stock prices have not reflected those fears. Euro Stoxx 50 is up almost 1.0% and American futures point to a higher open. If the gains hold, Nasdaq is on track for gains during seven of the last eight sessions.
Housing starts and Building permits are the only data on today’s docket which will not move the greenback. At 10:30 a.m., crude inventories will be worthy of attention and could affect the dollar versus some commodity-backed currencies. Fed Chairman Jay Powell is back on Capitol Hill for a second day and is widely expected to maintain his dire outlook for the economy.
What to Watch Today…
- Crude inventories at 10:30 a.m.
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The Euro stumbled overnight and is extending its decline overnight on little news and despite higher European equities. Traders may be squaring up positions in EUR/USD ahead of “Super Thursday” which sees policy decisions from the European Central Bank, Bank of England and the Swiss National Bank. We will be watching news surrounding the so-called TLTROs which are cheap loans to banks. The ECB made those loans even cheaper in April and could be poised to do so again.
GBP/USD experienced volatility overnight but the net result is a weaker sterling this morning. British inflation registered at its lowest pace since 2016. The data will solidify expectations the Bank of England will add to its monetary stimulus at tomorrow’s meeting. We expect the central bank to say it will increase its bond-buying by an additional 200 billion pounds or so. While it is unlikely the BoE cuts interest rates tomorrow, it is not out of the question for later this year.