Buck slides as Majors, EM FX, look to recover

Last week, the Buck remained on the rise following the positive-Dollar reaction to the “hawkishness” from a newly presided Federal Reserve. Chairman Kevin Warsh will be in Sintra, Portugal meeting with other heads of financial authorities such as Canada’s Tiff Macklem and Bank of England’s Andrew Bailey at the European Central Bank’s annual Forum on Central Banking. The potential is there for statements on future moves and financial steadiness to move the needle.

Geopolitics did not give us a break over the weekend, with the peace deal between Iran and the U.S. at peril after several attacks exchanged in the Strait of Hormuz. Naturally, energy markets were disturbed and oil prices returned to rising back up. Nevertheless, there seems to be risk appetite going as American exceptionalism once again plays into a positive correlation for stocks while the Buck keeps recent gains. No data points for today, but tomorrow there’s labor figures to digest ahead of Thursday’s June Non-Farm Payrolls and Employment Situation.

The week will not be shortened, as the July 4th holiday falls on Saturday and Monex offices will be running regular hours.

EUR

The Euro is up a bit this morning but remains relatively weak and still hovering near its weakest point in over a year to the Buck. This week will be important in determining if there is consensus amongst central bank decisionmakers and if they see the same tools with the same effects and conclusions. Warsh being new and Powell having established himself through various crises makes the event a breath of fresh air while fomenting some doubts about the Fed maintaining certain norms.

Data-wise, the shared currency got a little boost from growth in the money supply, with the M3 Money-Supply Year-over-Year climbing from 2.7% to 3.2%, meaning there is more flow and activity as lending has increased as well as accelerated corporate borrowing. Meanwhile, Economic and Consumer Confidence gauges also came out with better results than expected. Perhaps July defies the June experienced by the Euro, which could close as the worst month for the currency since June 2021.

MXN

The Mexican Peso is also recovering some of its value after depreciating to its weakest level since start of April. MXN continues its solid run, likely adding another 2.8% by the time June ends tomorrow. We have few statistics this week in the form of remittances and Manufacturing Purchasing Managers Index on Wednesday. Consumer Confidence will be released on Friday. June thus far has been the widest intra-month swing since August 2024 trading within a 2.3% range.