U.S. Dollar down as Delta forces rethinking

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U.S. Dollar down as Delta forces rethinking

The U.S. Dollar lost over 1.0% in value this week, according to the Bloomberg Dollar Spot Index, essentially erasing any of the advancement for the month. 

Overview

A volatile July has left the buck basically where it was at the end of June, without a ton of clarity in the global economy as the Delta COVID variant continues its rapid surge indiscriminately. Everywhere from China to Australia/Los Angeles to London, places that were celebrating some success, are implementing safety measures and return to mask requirements.

The Fed mentioned how there is still room for much growth before considering tapering and this has certainly translated into more upbeat equity markets. China’s ability and will to calm down investors also sent a wave of relief across many exchanges. This morning, June figures for Personal Income as well as Spending improved more than expected.

The former was estimated to contract (-0.3%), but it managed to rise 0.1%. The PCE Deflator, a favorite way for the Fed to measure inflation of personal consumption expenditures, came in slightly lower than predicted at half a percent. We shall see if August is a month of lull or major headlines as the U.S. government tries to pass a bipartisan spending bill.

What to Watch Today…

  • No major economic events are scheduled for today

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Q2 2021 Bloomberg Win

EUR  

The Euro is up by over half a percent for the week following positive economic indicators that are indicative of a recovery in progress. Consumer Price Index figures in July were better than expected, but more importantly, Q2 Gross Domestic Product growth surprised coming in at a pace of 2.0% over the 1.5% forecast. Indeed, these are good numbers, but the resurgence of the virus is dampening some of the optimism behind them. Euro is still vulnerable to losses, especially if some nations choose to shut down.

GBP  

Pound has benefitted greatly from the peace reached between EU and U.K. negotiators over trade agreements in the Northern Ireland/Ireland border. Although Britain has managed COVID relatively well recently, its NHS track and trace app that pings people that require isolation reached a record high. Expect all items and markets to question this new reality and whether we are prepared to handle another wave lie seen in 2020.

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