Euro climbs post-CPI, U.S. Dollar down to most peers
The U.S. Dollar is trading in weaker ranges across the board ahead of the Fed minutes due later today, while investors deal with mixed equity markets globally.
While European stock exchanges remained positive, there was plenty of red for indices across the Pacific Rim, as doubts over high energy costs have countered enthusiasm over artificial intelligence and high-end tech.
This is linked to growing worries about the lack of progress in easing Middle East tensions, with increased concerns over traffic through the crucial Strait of Hormuz. If this reads as familiar, it is because, for days now, talks about making any kind of deal have truly stalled. Meanwhile, traders and economists are concerned that governments are exercising very loose fiscal policy, seem unafraid of borrowing more, and are exacerbating expectations for higher inflation. Long-term bond yields are at multidecade highs, which is hurting outlooks for the health of the financial environment.
Later today, all eyes will be on what details can be taken from notes about the Fed’s last meeting. Other than that, the remainder of the week will be light, with some initial jobless claims figures tomorrow and the S&P Global Composite Purchasing Managers’ Index. So far this morning, the Buck seems to be nearing its weakest overall level since the start of May, according to the Bloomberg Dollar Spot Index.
What to Watch This Week…
- S&P Global PMIs, Friday, 9:15AM
- USA Online is always open
The complete Economic Calendar can be found here.
EUR
The Euro is about to break to a fresh new high as it looks to move beyond its strongest level against the U.S. dollar since mid-June. The appreciation is arriving as the Buck remains vulnerable to further losses if the Fed minutes later reveal hesitation to increase interest rates for what is left of the year. Furthermore, inflation numbers, in the form of the Consumer Price Index for July, showed prices increased at the expected pace of 0.2%, bringing the annual average to 2.9%. European Central Bank officials have previously stated a desire to return to a level closer to 2.0%, which would require tighter monetary policy. For now, there is about a 30.0% chance that the ECB chooses to hike interest rates by 0.25% for what is left of 2026. Additionally, the ZEW Survey Expectations revealed higher optimism than the month prior. Data-wise, the eurozone will also get August S&P Composite PMI figures, which, if positive, could make for an even stronger Euro.
MXN
The Mexican peso has started dwindling a bit and is no longer trading at a two-year high, but it remains quite strong, with a run of more than 3.0% since the start of July. Tomorrow, we will get minutes from the last Banxico meeting earlier this month, at which the decision was to keep interest rates unchanged. On Friday, we will get a chance to see June’s retail sales, but the biggest risk arrives on Monday as we take a closer look at gross domestic product growth for the second quarter. The expectation is a reading of 1.5%, which, if lower, could take away the gains the “super peso” has experienced. Otherwise, we could enter new multiyear-high territory.