The U.S. dollar mostly held its gains from late last week following strong retail sales and industrial production data on Friday.
Overview
However, the greenback is facing modest selling pressure against some of its major counterparts on suspected profit-taking and disappointing data.
Monetary policy will dominate the headlines this week with the U.S. Federal Reserve, the Bank of Japan and the Bank of England all set for policy decisions this week. The two-day Fed meeting is easily the largest risk event on the domestic calendar this week. While it is unlikely that the central bank will change policy on Wednesday, the messaging coming out of the meeting will be very important. There is now an 82.0% chance that the Fed will cut interest rates next month but more dovish speak from the Fed will push those odds higher and increase bets of additional rate hikes later this year.
The dollar has fallen a touch in early trading today after the Empire Manufacturing touched the lowest level since 2016.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
EUR
While other central banks have their normal policy meetings this week, the European Central Bank will hold a three-day forum in the beautiful town of Sintra, just outside of Lisbon Portugal. The agenda includes discussing and lauding two decades of the Eurozone but also addressing risks to its future. The rise of right-wing populism and Brexit are likely to be on the list of threats that need to be addressed.
The Euro fell just over 1.0% against the U.S. dollar last week.
GBP
The race to become the next Prime Minister continued over the weekend but the chances that Boris Johnson will eventually become the victor seems to increase every day. Johnson sat out the first tv debate yesterday. A new PM will be selected by July 22nd.
British consumer prices will be released on Wednesday followed by Retail sales on Thursday. The Bank of England will keep interested rates on hold on Thursday afternoon.
