U.S. Dollar Depreciating as Labor Looks Weak

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U.S. Dollar Depreciating as Labor Looks Weak

AUGUST 04, 2021

The U.S. Dollar is trading mostly tight ranges, but mixed direction as markets digest the possibility of a slowdown for the remainder of the year until the Delta variant is managed.

Overview

There has been a rise in those seeking vaccination after places such as New York City started requiring proof of the jabs from customers and workers of indoor establishments. In terms of data and how it ties to Fed monetary policy, the ADP Employment Change for July suggests there will be no rush to tapering QE anytime soon.

High expectations of 690K added payrolls to match what was seen the month prior came in way less than expected at 330K. We shall see what the Markit Composite Purchasing Managers Index (PMI) will offer at 9:45 AM and if the pace of expansion is also a disappointment.

Meanwhile, the equities markets in the U.S. and Europe are at an all-time high from a combination of expectations for better times ahead and solid earnings across tech and other industries. We shall see how much weaker the buck can get as items domestically look dwindled and pressure mounts on cities to reconsider mask mandates.

What to Watch Today…

  • No major economic events are scheduled for today

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EUR  

The Euro keeps climbing as things on the other side of the Atlantic are more focused on progress and finding ways to open up to tourists who are vaccinated. Additionally, European listed companies are having an outstanding moment with exchanges across the continent at their highest values.

There was also a comment from an ECB member regarding how officials are not going to rush to expand QE or help the economy, a sign that perhaps there is no consensus in maintaining loose policy for too long.

AUD  

The Australian Dollar has managed to climb 1.6% in value since the last week of July as headlines out of the Oceanic continent have improved. Australia acted early on the variant and sped up vaccine efforts thus the situation is looking less dire than elsewhere.

As a result, the Reserve Bank of Australia sees no need to maintain current levels of QE and could taper as soon as the beginning of September, when they are expected to meet on the 7th. Let us not forget how volatile things are, so these figures could change if the world is looking more chaotic down under. Damage by Delta in Asia is a negative factor currently.

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