The U.S. Dollar is steady to start the week, with developments in the trade front and the anticipation of key economic data towards the end.
Recent commentary from Fed officials has convinced markets that a cut to interest will come on July 31st, but now the question is whether they will reduce it by 25 or 50 basis points. Some economists have suggested that an aggressive cut might be unnecessary if performance in indicators keep outdoing expectations. Turbulence for the greenback will likely be subdued until we get closer to Friday where we get to look at Gross Domestic Product for Q2.
Additionally, we will see housing figures the next few days while Durable Goods Orders, important to gauge long-term spending, will be out on Thursday. China has said that they made concessions in talks with U.S. officials to not only open up their financial sector, but to increase purchases of American agricultural goods. If indeed trade is to be solved, the buck could suffer a bit as other assets feel the reprieve.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
The Euro has been up and down a lot lately, failing to find definite direction with mixed signals always coming from the continent. From Italy, it looks like the government will stay in place and Spain’s Prime Minister Pedro Sanchez survived as he reached a deal with political party Podemos to rule as an alliance. Pablo Iglesias, Podemos’ leader, managed to convince the government to give him a senior role in the administration’s cabinet.
Nevertheless, the upcoming European Central Bank meeting on Thursday could be one of dovish tone and action as some analysts believe the ECB is ready to throw some stimulus to the financial system. Mario Draghi has three meetings left to attend as President, but this one could be the one that signals a return to easing to ease the transition for Christine Lagarde, a dovish-inclined figure herself.
The Pound is down a bit, but has room for improvement if a delay to Brexit or some other development that prevents a no-deal comes along. Reality is that Boris Johnson, the main campaigner of Brexit, is likely to take the role of Prime Minister in the next few days, but Parliament will make his goals hard to reach.
A “no deal” scenario has been voted down in Parliament and the EU is saying they do not see much room to change anything already agreed upon with May. Chancellor of the Exchequer, Philip Hammond, has sworn to resign if Boris comes in, thus a change in that position is coming as well. Strange times in the U.K. will keep Pound traders guessing.