Steady Buck tilting stronger for the week

Thus far, we are hearing reports of good conversations taking place as a U.S. delegation of business leaders accompanies the U.S. President in China. Beijing officials have signaled “greater openness,” which indicates to traders and investors this visit is more about improving the sentiment than producing any type of hard policy reset. For now, it is not impacting markets either way while the American President has extended an invitation for China’s President Xi Jinping to visit Washington in September.

At the time of writing, a few data points were released showing that inflationary pressures keep mounting, perhaps not at all a surprise as the conflict’s effects have cut off smooth access to energy and global trade. Import Prices for April were quite a bit higher than expected, advancing at a pace of 1.9% instead of the 1.0% estimate. Exports prices also surprised in their rapid rise, climbing 3.3% vs. 1.2% forecast. Meanwhile, last month’s Retail Sales came in at the anticipated 0.5%, significantly slower than the prior reading of 1.6%. We shall see how the week comes to an end and if anything will spark much in FX action.

This morning, ADP employment change showed the US economy added more jobs than expected last month, and initial and continuing jobless claims declined. Though on the surface this is news of a continuing resilience in the US labor market, it’s quite often that nonfarm payrolls and ADP have come in on opposite sides of market expectations, so tomorrow’s US employment data is likely to be the real market mover.

What to Watch This Week…

• U.S. Retail Sales, Friday 8:30AM
• Monex USA Online is always open

The complete Economic Calendar can be found here.

GBP ⇓

Pound Sterling remains on the headlines even with limited weakness as the United Kingdom continues to handle a tough political situation. Calls and bets are growing that Keir Starmer will need to resign from his post as Prime Minister. The currency is definitely under pressure, still at its lowest point against the Buck since April 29th. It could get worse as the crisis is spooking important overseas bond buyers. Developments from the other side of the pond will keep GBP interesting to watch.

MXN ⇓

The Mexican Peso is the biggest mover this morning, losing a little ground to the U.S. Dollar as traders are growing a bit worried over the lack of good news from economic indicators. Next week will be crucial for MXN flows and data with the release of Retail Sales, Gross Domestic Product, and inflation in the form of Consumer Price Index. One argument being made for Peso maintaining its shine is its carry-trade appeal in spite of a deteriorated outlook for the economy. Thus far, MXN value has kept plenty of its yearly gains while up 3.5% ever since start of April.