Dollar Declines As Risk Improves

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Dollar Declines As Risk Improves

AUGUST 02, 2021

The U.S. dollar is under pressure this morning with the Dollar Index down 0.2%. 

Overview

The safe-haven currency has lost favor as global equities are solidly in the green this morning, extending their summer rally. According to Bloomberg, global stocks enjoyed their longest winning streak (6 months) since 2018 in July.

U.S. futures show American shares will open higher on news late Sunday that the Senate is poised to pass a $550 billion infrastructure passage later this week.  The bill is expected to include over $100 billion dollars in new spending on roads and bridges which is sorely overdue.

Later this morning, the July PMI manufacturing print will pique interest.  ISM manufacturing will follow shortly after.  The biggest risk event of the week is Friday’s Non-Farm payroll number.  Economists expect the American economy added 735K jobs in the month of July.  However, Minneapolis Fed President Neel Kashkari warned that the Delta strain of the virus could limit future improvements as it might keep some from looking for work.

What to Watch Today…

  • Manufacturing PMI and ISM

View Economic Calendar

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Q2 2021 Bloomberg Win

EUR  

The Euro has improved against the U.S. dollar to start the week after strong economic data.  Data showed that factories in the region, especially Germany and Austria, are hiring new workers at a record pace to keep up with high order demand.  The survey released by IHS Markit showed that manufacturers are still contending with substantial supply-chain bottlenecks.  However, the print was enough to allow the common currency to rise to the top of recent ranges.

AUD  

The Australian dollar shook off earlier losses and is 0.3% stronger against its American counterpart to start the American session.  The pop stronger comes even after China’s manufacturing purchasing managers’ index badly missed expectations. The 50.3 reading in July is the worst in over a year.

Traders appear to be positioning themselves ahead of tomorrow’s Reserve Bank of Australia meeting.  The central bank is expected to keep rates unchanged. The central bank is also expected to push back plans to scale back its bond purchases, making the Aussie’s pop even more curious.  However, this morning’s move is a drop in the bucket.  The Aussie is still within half a percent of its weakest level this year against the U.S. dollar.

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