Global overview
The U.S. dollar kicked off August on its front foot as it climbed to three-week highs. The greenback was at or near three-week peaks against the euro, sterling, and Canadian dollar. The dollar index fell for the second straight month in July on the view that the Fed’s July rate hike may have been the last of its most aggressive tightening cycle in decades. Still, the dollar has stabilized since its recent tumble to 2023 lows versus its major peers. While the buck has found a vulnerability from the view that U.S. lending rates may have peaked, the greenback is drawing underlying support from steady signs of a sturdy U.S. economic backbone. Moreover, the world’s largest economy appears to be firing on more cylinders than its major peers. With relatively solid economic fundamentals keeping the dollar afloat, attention this week is on America’s job market. America’s July employment report on Friday is forecast to show employers netted 200,000 jobs, down slightly from 209,000 in June. Unemployment is forecast to steady near half-century lows of 3.6%.
Euro slips toward multiweek lows
The euro posted a second straight monthly advance against the U.S. dollar in July. Yet for the third month in a row, EUR/USD finished below the key 1.10 level. The euro rose more than 0.7% in July when it finished at 1.0993. While stronger, the euro finished well below its mid-July peak of 1.1275, its highest level since February 2022. The euro has encountered upside resistance after the ECB last week raised rates but acknowledged a weaker economic backdrop that, if sustained, could hasten the end of the central bank’s tightening campaign.
Sterling near 3-week low; BOE looms
Sterling tilted towards Friday’s three-week low against the greenback in risk-cautious trade with global equities paring recent gains. The pound took little comfort from news that UK manufacturing enjoyed a surprise upgrade to 45.3 in July from an initial estimate of 45.0. While a slight improvement, the data didn’t allay broader worries about the UK economy by keeping well below 50 that separates growth from contraction. The pound’s main sights are set on the Bank of England’s Thursday policy decision at which central bankers are expected to hike rates by at least 25 basis points from 5%.
Aussie’s plunge drags on commodity siblings
Canada’s dollar fell to three-week lows against its U.S. rival as it largely fell prey to sliding commodity siblings. The Aussie dollar plunged 1.3% and dragged on the kiwi and loonie after Australia’s Reserve Bank unexpectedly kept lending rates steady at 4.1% which compared to forecasts of a quarter-point hike to 4.35%. Canada’s main economic event looms Friday with the country’s July employment report. Hiring is forecast to slow to an increase of 21,100 last month from nearly 60K in June. Unemployment is expected to tick up to 5.5% from 5.4%.
Dollar buoyed by U.S. economic resilience
Table: rolling 7-day currency trends and trading ranges
Key global risk events
Calendar: Jul 31-Aug 4
Have a question? [email protected]
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
