The U.S. dollar pushed higher yesterday and maintained its momentum overnight.
The Bloomberg Dollar Spot Index touched its highest level of 2019 late yesterday, surpassing its recent high in May. The greenback received a boost yesterday after Federal Reserve Bank of Boston President Eric Rosengren made the case against additional rate cuts. This is unsurprising as Mr. Rosengren also voted not to cut interest rates last month.
For his part, President Trump continued to hammer the Federal Reserve and blamed the central bank for the strong dollar. He tweeted that the central bank should cut rates a full percentage point to boost the economy and weaken the dollar. Still, most analysts point out that fear over the president’s trade war is the main driver keeping the dollar strong. Most likely, it’s a bit of both. Either way, the dollar looks to remain near the top of recent ranges over the near term.
There is no major economic data due out in the United States so traders may move their attention to tomorrow’s release of the minutes of Federal Reserve’s latest meeting, followed by a speech by Fed Chief Jay Powell on Friday in Jackson Hole, WY.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
The Australian dollar bucked the trend of U.S. dollar strength overnight and gained nearly a half a percent. The Reserve Bank of Australia held a more rosy outlook for the economy in the minutes of their last meeting. The RBA held that tax cuts, infrastructure spending, and recent rat cuts were providing “increased growth momentum”, which also allowed traders to reduce bets for additional cuts this year.
The British pound is back under pressure this morning as Prime Minister Boris Johnson begins his attempt to renegotiate Theresa May’s Brexit deal. Johnson is reportedly trying to remove the so-called “Irish backstop” from the agreement and find an alternative way to prevent a hard border between Ireland and Northern Ireland. This will be an uphill battle as the EU has already said this aspect is not up for negotiation. With Brexit back in the spotlight, expect the sterling to continue to struggle.