Currency Outlook

JULY 2019 – IN BRIEF

What happened

  • U.S. Dollar declined in value all across the board, 1.2% per Bloomberg Dollar Spot Index
  • Signs of slow economic activity such as contraction in long-term spending hurt the buck
  • Safe-haven currencies drifted apart as Swiss Franc climbed 1.6%, while Yen stayed quiet
  • Heated campaign for a Tory U.K. Prime Minister kept Pound in check, “no-deal” scenario likely
  • Benefits of recovery in economic indicators and a dovish Fed caused Euro to rise by 1.0%
  • Per the MSCI Emerging Market Currency Index, the greenback sank in June by 2.0% following improved prospects of a solution to tariff wars

Tempus’ view

  • July will be a month for U.S. Fed officials to build and discuss an argument for rate cuts
  • U.S. Dollar troubles may not be over as Fed looks to cut and President Trump puts downward pressure in order to compete
  • Euro could solidify its strengthening if first looks at Q2 data reveal a faster pace of growth
  • Support in the U.K. for a “no-deal” Brexit could exacerbate Sterling losses further
  • A deal between China and the U.S. is not imminent, but faltering numbers in both countries will force a faster resolve

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