Dollar Range Bound; Euro Near 4-Month High
The U.S. dollar is slightly weaker this morning after gaining modestly yesterday afternoon.
The net result is the greenback is largely locked in ranges against its G10 counterparts and there isn’t much on today’s docket that could change the status quo.
The economic docket showed that housing starts accelerated by 17.3% which is a fairly strong print but missed estimates of 22.2%. Building permits also slightly missed estimates. Later, the University of Michigan consumer confidence print will cross the wire.
We will also keep an eye out for headlines regarding a possible additional stimulus package. The White House has said it wants another package but insists any deal needs to include a payroll tax cut. Despite the usual inability to make progress in Washington, markets are pricing in additional stimulus as lawmakers from both sides of the aisle do not want to return to their constituencies empty-handed months before the November election.
Former Fed Chairs Janet Yellen and Ben Bernanke will testify before Congress. While their comments are unlikely to move markets, the duo will provide this trader with a dose of nostalgic entertainment on an otherwise slow, summer Friday afternoon.
What to Watch Today…
- University of Michigan Consumer sentiment at 10 a.m.
Complete Economic Calendar can be found here.
The Euro popped higher overnight after dipping during the second half of yesterday’s session. Overall, the Euro is headed for its fourth straight weekly gain against the beleaguered buck and remains close to a four-month high.
There is modest optimism that that European leaders will make progress towards a region-wide stimulus package despite some officials tamping down expectations. German Chancellor Angela Merkel threw some cold water on the optimism and suggested the negotiations will be “very, very difficult.” Dutch Prime Minister Mark Rutte said he put chances of an agreement at “less than 50%.” If agreed upon, the package would EU-issued debt and grants totalling 750 billion euro.
The sterling is down about 0.5% against the greenback this week, representing its worst week in four. The pound is also poised to be the worst-performing G10 currency this week versus its American rival. Speculation has increased that the Bank of England will find the scope to cut interest rates again in the coming months. Economists at Goldman Sachs say policymakers may indicate that interest rates could even turn negative, putting downward pressure on sterling.