U.S. Dollar tight ahead of CPI, Peso rising
The U.S. Dollar is trading in mostly tight ranges across the board as markets await inflation numbers in what has been a week light on data releases.
At 8:30AM, we will get the release of July’s Consumer Price Index figures, slated to show a slight bump to the pace of price growth of 0.1% following a June contraction of (-0.4%). Investors and traders are wondering if chances for a rate hike at the Fed’s September 16th meeting will move at all if there is evidence of a return to higher prices instead of deflation. At the same time, could the Buck face downward pressures if there is a surprise showing prices fell again. The lack of consensus among Fed members may not change, but comments will surely move the needle as the media seeks official reaction. We may finally get some volatility.
At the moment, it seems the Dollar’s weakening has hit the brakes after falling to its weakest level overall since start of June, according to the Bloomberg Dollar Spot Index. Meanwhile, there are mixed feelings out there about Iran-U.S. deal possibilities with Pakistan’s Foreign Minister stating that the deadline for a memorandum of understanding between the two nations engaged in battle can be extended. As always, there is tremendous focus on who is actually in control of the crucial passage: the Strait of Hormuz. Tomorrow, we will get to see the supply-side inflation via Producers Price Index.
What to Watch This Week…
- Euro-zone GDP, Friday
- USA Online is always open
The complete Economic Calendar can be found here.
EUR
The Euro remains solidly trading near its mid-June highs, likely to improve if data points fall in line with expectations. Tomorrow, we will get June Industrial Production, expected to be flat, but if it is higher surely a benefit for Euro’s value. Friday will feature the main event as we review Gross Domestic Product growth numbers for Q2, which are estimated to show a 0.4% advancement.
MXN
The Mexican Peso has improved and reached fresh new highs against the Buck, its strongest value since end of May 2024. Carry-trade appeal is certainly part of what is aiding MXN fortunes along with some LATAM FX, while the region tries aiding in rescue and relief efforts after a major earthquake devastated the “coffee axis” region of Colombia. Historically, Mexico has taken the lead in assistance and this may be affecting financial markets as well with many Colombian cities without ability to do any banking. Additionally, concern about the future of the USMCA pact seems to be affecting the Buck more negatively than MXN. “Super-Peso” seems to have arrived.