Dollar Erases Yesterday's Gains

The U.S. dollar is lower against all of its G10 counterparts, erasing modest gains from yesterday’s session.

Overview

Global equity indexes, led by the Shanghai index, are all in the green this morning which is lessening demand for the greenback.

The Euro is set for its first daily gain in six days on general dollar weakening and despite weaker than expected German industrial production data.

The Australian dollar shot higher as the central bank projected that inflation will be higher in the coming two years.

There no major fundamental data on today’s domestic schedule so look for technical trading and news from abroad to dictate trade. In short, tight trading ranges are likely.

 

JPY

The Japanese yen gained even as risk sentiment turned positive following reports that the Bank of Japan considered raising interest rates earlier this year. Reuters reported market turbulence upended a plan to raise rates in January and weak consumer prices got in the way of a second attempt later in the year. It is our belief that this reporting will do little for the long term outlook for USD/JPY outside of some modest strength today.

 

GBP

The sterling has been unable to fully take advantage of a weak U.S. dollar overnight. GBP/USD is within 0.5% of the fresh 11-month low touched during yesterday’s session. Overnight a report showed that U.K. Prime Minister Theresa May is looking for a later Brexit deal deadline. Bloomberg is reporting that the EU hoping for a “showdown moment” in September but the U.K. is aiming for a later deadline. The U.K. is set to leave the EU officially at the end of March and no deal has been reached yet.