Global overview
The U.S. dollar stabilized after a data-induced slide to one-week lows. Major currencies like the euro, sterling, and Canadian dollar were little changed as the parade of big-ticket U.S. data continues and culminates with nonfarm payrolls on Friday. The greenback hit a one-week low against the euro around 1.0890 after U.S. numbers Tuesday offered evidence of the Fed’s restrictive interest rate policy cooling the world’s biggest economy. Consumers grew less confident in August while job openings receded more than expected in July. Given the Fed’s data dependent policy stance, the softer numbers nudged the bar higher for another rate increase by year-end. Next to sway the Fed’s rate debate will be data today on ADP private sector hiring and second quarter growth. Consumer spending and inflation arrive Thursday, followed by the week’s marquee event: Nonfarm payrolls on Friday. The buck would be vulnerable to outcomes that should pour cold water on the notion of a resilient U.S. economy.
Euro pops to 1-week highs
The euro was camped near session highs and its strongest level in a week against the U.S. dollar. The euro found a positive catalyst as cooler U.S. data this week led to lower Treasury yields, higher stocks, and a weaker dollar. Upside for the euro remained limited, however, as domestic data offered a reminder of the bloc’s fragile shape. Euro zone economic sentiment fell for a fourth consecutive month in August. The deteriorating trend for European data bolsters the case for the ECB to pause rate hikes in September.
Sterling flirts with 1-week peaks
Sterling’s bounce toward 1.27 lift it to nearly one-week peaks against the U.S. dollar. The absence of much UK data this week has led sterling to take its cues from broader risk sentiment. Risk appetite improved after so-called bad news on the U.S. economy was well received on Wall Street Tuesday, suggesting a somewhat lower risk of the Fed raising rates again. But the parade of U.S. numbers continues with the market spotlight on U.S. nonfarm payrolls Friday. Forecasts suggest hiring moderated from 187,000 in July to 170,000 in August, a still solid amount.
C$ rebounds from 12-week low
Canada’s dollar steadied after underwhelming news on the U.S. economy weakened the greenback and helped the C$ rebound from 12-week lows last week around 1.3640. Risk sentiment remains fluid and will look for direction from U.S. data over the balance of the week. For August, USD/CAD has rallied nearly 3%, an upswing that has the pair on neutral ground for the year compared to its 2022 close near 1.3550. Canada issues key growth numbers Friday that if weaker would cement expectations for Ottawa to hold interest rates at 5% on Sept 6.
Dollar cedes ground on softer data
Table: rolling 7-day currency trends and trading ranges
Key global risk events
Calendar: Aug 28-Sep 1
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*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.
