Dollar Mostly Flat to End the Quarter

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Dollar Mostly Flat to End the Quarter

JUNE 30, 2021

The U.S. Dollar is mostly unchanged to start the last day of the quarter.

Overview

Risk sentiment is mixed across the globe with many averages a touch lower as the threat of the Delta variant weighs on stocks.

Federal Reserve member comments and the outlook for monetary policy have been a major factor in allowing the greenback to strengthen this month.  However, comments made yesterday pulled the dollar in opposing directions.  Thomas Barkin said he wants to see much more progress in the labor market before slowing down monetary stimulus.  But Christopher Waller held an opposing view and said that recent economic performance warrants considering pulling back some measures.

This morning’s private jobs data surprised to the upside.  ADP said that private firms added 692K jobs in June, beating estimates of 600K.  While a healthy number, ADP’s number did not foreshadow a blockbuster non-farm payrolls number last month so the reaction to the number has been muted.  The slew of employment data will continue with weekly jobless claims tomorrow and non-Farm payrolls on Friday.

What to Watch Today…

  • Pending Home Sales at 10 a.m.

View Economic Calendar

CAD  

The Canadian dollar is up against the greenback and most of its G10 rivals to start the day.  The price of West Texas crude oil is up over a percent, giving the commodity-based currency a jolt.  Volatility is likely to increase later this morning after Canada releases their April Gross Domestic product print.  Economists expect our northern neighbor’s economy had shrunk 0.8% month over month in April, down from a 1.1% increase in March.  Still, the year-over-year number is expected to show an incredible rebound of 19.1%.

GBP  

The British pound is up this morning even after data confirmed the U.K. economy shrank more than forecast quarter over quarter.  While the economy shrank 1.6%, there were positive aspects to the data.  Most notably, the savings ratio rose to nearly 20%, adding to a cash pile that is likely to power a consumer boom once the economy fully reopens next month.  Despite threats of the Delta variant, the British government looks poised to lift all measures on July 19th.

The expected uptick in spending could also spark inflation.  Outgoing Bank of England Chief Economist Andy Haldane reiterated this worry in his final speech this morning.  Haldane said inflation is likely to finish the year close to 4%, double the central bank’s target.

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