The U.S. Dollar is rallying this morning based on better-than-expected data released this morning.
Overview
Initial and Continuing Jobless Claims both came in lower than forecast, a good sign for the labor sector. Furthermore, Retail Sales for August expanded, which was the opposite of the contraction estimated at 0.7% instead of dipping (-0.7%). Indeed, things are looking rosier for the U.S., but global investors are concerned about the need to downgrade outlooks because of the Delta variant effects as well as the heavy involvement of the Chinese government into the nation’s “private” industries.
In the latest attempt at exercising control, China’s government is going after casinos, gambling, and Macau, its renowned Vegas-like destination. Commodities are also seeing their prices dwindle as traders wonder about the demand for meals, while oil prices could go up after a statement from Chevron’s top executive that high energy prices are here for the foreseeable. We shall see if global risk appetite goes down while reality looks nicer here and it plays as a boost to the buck as safe-haven, a possibility mentioned in the September FX outlook.
What to Watch Today…
- No major economic events scheduled for today
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EUR ⇓
The swings continue for the shared currency, which cannot find precise direction yet as economic numbers prove challenging to the ongoing recovery. The microchip/semiconductor shortage is starting to weigh on the continent as car sales fell (-18.0%) in August after falling 24.0% in July on a year-on-year basis.
Indeed, the continent has had to balance the need to keep workers safe in manufacturing while also having to cut back on vehicle making because of the lack of the base technology in microchips. Modern cars require a lot of things just simply not being made by more than a few companies. Expect Euro to slide further if indeed the U.S. situation starts looking economically much better in performance
GBP ⇓
Pound Sterling is not a big mover today, but it is worth mentioning that Prime Minister Boris Johnson is revamping his cabinet. Britain has had to deal with changes to its trading relationships and its central bank will need to figure out if tapering and rising interest rates will be the right move.
Data for the U.K. lately has shown extremes in both lows and highs, which means the Pound will not be necessarily easy to predict the remainder of the year. The U.K. is counting on a United Nations statement that they expect the global recovery to be the fastest in five decades.
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