Dollar Hangs on to Recent Gains as US-China Tensions Enter Next Stage

  • There are a lot of moving parts regarding the US-China relations as we move deeper into the next mini-cycle of escalation; the dollar has hung on to its recent gains
  • Stimulus talks remain dead in the water; Trump signed four executive orders over the weekend, as expected
  • The UK labor market is likely to remain under stress; Norway’s July CPI surprised slightly on the upside
  • China July CPI and PPI came in slightly higher than expected Continue reading “Dollar Hangs on to Recent Gains as US-China Tensions Enter Next Stage”

Dollar Firm Ahead of Jobs Data as US-China Tensions Rise

  • Rising US-China tensions are adding to a risk-off vibe; the dollar has clawed back some of its recent losses but remains vulnerable
  • Today is the ostensible deadline for stimulus talks; July jobs data will be the data highlight of the week
  • Weekly jobless claims yesterday offer a glimmer of hope as we move into August; Canada also reports jobs data
  • Germany posted a strong set of export and IP numbers for June but imports disappointed; the situation in Turkey remains tenuous
  • Japan reported firm June real cash earnings and household spending; RBA released its quarterly Statement on Monetary Policy; Chinese exports surprised on the upside

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Sterling Shines as BOE Delivers Less Dovish Than Expected Hold

  • The dollar remains under pressure; weekly jobless claims will be the US data focus; the outlook for July jobs data tomorrow continues to dim
  • The US Treasury plans to sell a record $112 bln of bonds at next week’s quarterly refunding; talks on the next stimulus package continue
  • Brazil cut rates 25 bp to 2.0%, as expected; RBI kept its repo rate unchanged at 4.0%.
  • BOE delivered a less dovish than expected hold; Germany reported strong June factory orders; it appears that Turkey has pared back its defense of the lira

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Dollar Remains Under Pressure

  • Precious metals continued on their upward trend; the dollar remains under pressure
  • Reports suggest the White House and the Democrats hope to reach a deal by the end of the week; US and China have scheduled a review of the Phase 1 trade deal for August 15
  • ADP’s reading on July private sector jobs will be the highlight today; Brazil is expected to cut rates 25 bp to 2.0%
  • Eurozone reported mixed final services and composite PMI readings; Turkey’s short-term implied rates have come down after yesterday’s spike
  • Japan, Australia, and China reported final July services and composite PMIs; Thailand kept rates steady at 0.50%, as expected; Indonesia’s Q2 GDP came in worse than expected

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Dollar Comes Under Pressure Again

  • US-China tensions are heating up again; the dollar is under pressure again
  • Talks on the next stimulus package may have made some limited progress; stalled talks have led Trump and some of his advisors to consider the use of executive decrees
  • US Treasury said it expects to issue $947 bln in debt in Q3; there is not much in the way of US data
  • CFTC data show speculative investors increased their short positions; Turkey reported July CPI; dislocations in Turkey’s money markets continue to rise
  • Japan July Tokyo CPI came in higher than expected; RBA kept policy unchanged, as expected

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Dollar Steadies but Further Losses Expected

  • The dollar is stabilizing after broad-based losses last week; ahead of jobs data Friday, we will get other important clues to the health of the US economy
  • Democrats and republicans still seem to be far apart in the stimulus bill negotiations; late Friday, Fitch moved the outlook on its AAA rating for the US from stable to negative
  • The UK government is reportedly considering re-instating some form of lockdowns in London should infection rates worsen; eurozone reported firmer final manufacturing PMIs
  • Japan final Q2 GDP remained steady at -2.2% SAAR vs. -2.8% expected; Caixin July China manufacturing PMI came in stronger than expected

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Dollar Soft as Unemployment Benefits Set to Expire

  • Markets are balancing the negative virus news stream with strong earnings reports; the dollar continues to make new lows
  • The extra $600 per week of unemployment benefits is likely to expire today; there are several US data readings out today; Colombia is expected to cut rates 25 bp to 2.25%
  • Eurozone preliminary Q2 GDP contracted -12.1% q/q and -15.0% y/y; July eurozone CPI came in higher than expected
  • Japan reported mixed data; signs of official concern with the strong yen are growing; China reported official July PMI readings; Korea reported strong June IP

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Dollar Steadies as Market Sentiment Sours

  • Market sentiment has soured today; the dollar has steadied but the outlook remains one of weakness
  • The Fed delivered a dovish hold with no surprises; extension of the Fed’s USD liquidity lines is a small positive for EM
  • We get the first look at US Q2 GDP; weekly jobless claims will also be reported
  • German data today has been mixed; eurozone July economic confidence index improved to 82.3 vs. 81.4 expected
  • Japan officials are planning to tighten restriction to help limit the current spike in infections; Japan reported strong June retail sales; the strong yen is raising official concerns

Continue reading “Dollar Steadies as Market Sentiment Sours”