US Dollar Rises Against Trading Pairs Ahead of Fed Appearances
The US dollar rose against its major trading partners except for a small decline against euro, ahead of Federal Reserve official appearances. FX will be dominated by two key themes over coming months: analysts said in a note.
The first is the prospect of Marine Le Pen’s RN party coming to government and setting Paris on a collision course with Brussels over France’s debt trajectory.
The second are welcome signs of US disinflation, which will give the Federal Reserve enough confidence to start cutting rates in September
Forex market data showed that the US dollar was quoted higher against all G10 counterparts except the European single currency – USDEUR was last 1.07087 – with its largest gains coming in relation to the New Zealand dollar, Norwegian krone and Swiss franc.
Dollar strength was less pronounced in relation to the broader G20 basket, however, as the Korean won, South African rand, Polish zloty and Indian rupee all managed to eke out gains over the greenback. A quick summary of foreign exchange activity on Monday showed that USDEUR rose to 1.0710 from 1.0704 at the Friday US close.
Eurozone wages accelerated in Q1, according to data released overnight. The next European Central Bank meeting is scheduled for July 18.
GBPUSD fell to 1.2671 from 1.2687 at the Friday US close and 1.2706 at the same time Friday morning. UK home prices were flat in June, data released overnight showed. The next Bank of England meeting is scheduled for Thursday, when no change in interest rates is expected.
USDJPY rose to 157.6760 from 157.3542 at the Friday US close and 157.1512 at the same time Friday morning. Japanese core machinery orders declined in April, data released overnight showed. The next Bank of Japan meeting is scheduled for July 30-31.
USDCAD rose to 1.3741 from 1.3733 at the Friday US close but was below a level of 1.3752 at the same time Friday morning. Canada housing starts for May are due to be released at 8:15 am ET, followed by Canada securities purchases data for April at 8:30 am ET. The next Bank of Canada meeting is scheduled for July 24.
In Europe, USDEUR was quoted 0.13% higher around 1.07087 after climbing further off Friday’s intraday lows around 1.0667 with the euro outperforming in Europe after Eurostat said wage packets grew 5.3% YoY in Q1, and ECB chief economist Philip Lane implied in an interview with Reuters that a July interest rate cut is unlikely.
He said services inflation needs to come down further and that more than one month of data is needed before the next cut, seemingly ruling out a July policy move. The next calendar highlight for the euro is the release of final inflation figures for June on Tuesday at 5am ET.
Elsewhere in Europe, GBPUSD was quoted 0.09% lower around 1.2672, near Friday’s intraday lows around 1.2656, after trying and failing to recover above the 1.2700 handle overnight.
British pound sterling will be sensitive this week to Wednesday’s inflation figures for May, and to any forward guidance given in Thursday’s Bank of England policy decision.
In Asia, USDJPY was quoted 0.24% higher around 157.64 after climbing further off Friday’s intraday lows around 156.87 during the overnight session. The yen rallied briefly in Asian trade on Monday when the Cabinet Office said machine orders fell 2.9% month on month while rising 0.7% year on year in April.
The next calendar highlights in Japan are Wednesday’s trade data and Friday’s inflation figures for May. #US Dollar Rises Against Trading Pairs Ahead of Fed Appearances
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