The U.S. dollar was under pressure much of yesterday following terrible manufacturing prints.
Overview
But dovishness abroad has allowed the greenback to recover against a number of its counterparts overnight.
The Federal Reserve kicks of its two-day meeting today. There is only a small chance the central bank will cut rates at the conclusion of their meeting tomorrow but consensus has grown significantly around a July rate cut.
Housing starts data this morning added more cause for concern but the market has shrugged off the data in deference to central banks abroad. The FOMC decision will be the highlight of the week tomorrow, but the Bank of England and Bank of Japan will release their policy decisions on Thursday. With no more major data scheduled for today we will keep an eye on headlines out of Sintra and political news in the U.K.
What to Watch Today…
- No major events scheduled for today.
EUR
The Euro fell to a two-week low against the U.S. dollar this morning following dovish commentary from European Central Bank President Mario Draghi. In a speech at the ECB’s symposium in Sintra, Portugal, Draghi said that more interest rate cuts are indeed part of the monetary authority’s toolkit. Of course they are, but market participants took him to mean that additional stimulus is likely, dragging down the common currency. Draghi will also sit on a panel later this afternoon and may create further headlines.
AUD
The Australian dollar continues to be under pressure and fell to a 5-month low on increased bets of further interest rate cuts. Minutes from the last Reserve Bank of Australia meeting showed that “members agreed that it was more likely than not that further easing in monetary policy would be appropriate.” The RBA just cut interest rates for the first time in three years and odds are increasing that the central bank will make a similar move by the end of the summer.
