U.S. Dollar up ahead of Wednesday’s Fed meeting
JULY 29, 2019
The U.S. Dollar’s momentum has not been halted following a weekend where doubts renewed regarding trade.
Per reports, U.S. and Chinese negotiating officials have aired their grievances, but not enough of urgency has been felt in reaching a deal. The week is an eventful one featuring more than just talks with the expected interest rate cut coming on Wednesday along with income as well as labor data. This month is coming to a close with the buck’s momentum under threat if the post-announcement press conference by the Fed’s Jerome Powell indicates dovish sentiment that will double down on a rate cut for September 18’s meeting.
The news of lack of enthusiasm over a trade agreement between the two largest economies translated into poor equities around Asia, especially Hong Kong’s Hang Send Index down by over 1.0%. Protests over policies have already created a sense of angst around Hong Kong and poor market activity could mean further greenback advancement. Thus far, the buck is up 1.4% for the month per the Bloomberg Dollar Spot Index.
What to Watch Today…
- No major events scheduled for today.
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The Euro has declined by 2.2% in July, falling primarily on poor economic data that has made it clear the continent could use a boost, not only monetarily, bust also fiscally. The European Central Bank’s President Mario Draghi and other members have pointed out the obvious: after years of financial crisis management and overseeing recovery through loose monetary policy tools, the central bank has very limited options in what it can do to create an impact for the bloc’s economy.
In recent discussions, Draghi and other financial heads are ringing the bells of government spending; a step they say is needed after the ECB did what it could to create an accommodative environment. With Italy struggling and Germany suffering contractions, these two will need to find domestic hopes to lift the shared currency in August. With vacations and holidays taking over, it might be difficult to see a return to gains for Euro in August.
The Pound hit a fresh 2-year low as everyone in government seems to believe a “no-deal” Brexit is indeed possible now that Boris Johnson has taken office. There are even talks of the new Chancellor of the Exchequer, Sajid Javid, willing to cast aside over 1.0 billion pounds on a plan to crash out of the European Union. Such headlines will keep Sterling down after the 3.5% dip already this month. Unless something changes, Pound could be bound to some historic lows.