Daily Market Update

Dollar Quiet After Tumultuous Week, Still Down

July 12, 2019

The U.S. Dollar is down by half a percent for the week, according to the Bloomberg Dollar Spot Index. Indeed, the eventful last few days established that there are doubts about economic growth and thus the Fed will see it fit to cut rates this year.

Overview

Although chances of a reduction for the July 31st meeting are basically guaranteed, FOMC Minutes showed there are some members willing to wait it out longer. Ultimately, it is clear that many things remain uncertain, but at least central bank easing is coming and that will reduce the greenback’s chances to stay afloat for the remainder of the year.

Throughout the Fed Chair Powell’s testimony, it became obvious that the government is concerned with Libra, Facebook’s crypto-currency and its potential to change monetary dynamics. Also, there have been headlines regarding intervention from the Treasury that could come down the line to make the dollar more competitive after a dominant run.

All these issues could come to foment the shedding of dollar positions globally and surely sink the buck across the board. For now, until a cut is made, the currency will maintain close to current ranges.

 

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

 

EUR

The Euro did appreciate this week, but failed to gain enough to stay in levels that were last seen in June. Good data in the form of inflation and impressive industrial productivity from all, except Germany, are building a good foundation to argue for stronger Euro levels.

This week’s dollar weakness did not fully materialize into a full blown rally, but again, until a cut occurs the majors will not gain significantly against the buck. Next week, we shall see if there is Gross Domestic Product growth that merits another weekly bump for the shared currency.

GBP

The Pound has lost 1.2% of its value thus far in June after diplomatic turmoil and domestic polarization have affected the perception of stability in Great Britain. U.K. Navy intercepted what looked like another attempt by Iranian forces to intercept oil carriers as the governments try to lower tension over nuclear development disagreements. Additionally, friction with the U.S. administration after the ambassador from the U.K. had to quit make those global concerns more difficult to navigate.

Finally, Boris Johnson may be set to become the Prime Minister, but domestic and EU opposition to remake the current deal are economic concerns for businesses who are claiming they cannot afford further delays in the process to either leave with trade or revoke Brexit. Sterling may not rise any time soon unless there is a surprise.

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