After tumbling against most majors yesterday amid heightening tensions between North Korea and roughly the rest of the world, the US dollar pared losses on Tuesday as the overall risk sentiment improves. The dollar index printed a multi-year low yesterday as it fell 0.70% to 91.64, the lowest level since January 2015. On Wednesday, the index bounced back 0.25% to 92.45 amid a sell-off in the Japanese yen and the single currency, down 0.35% and 0.18% respectively.
Over the last couple of weeks, the FX market was mostly driven by the twists and turns faced by Donald Trump, as well as speeches from central bankers. This week, the market’s attention will shift towards US economic data. Indeed Fed members are expected to remain quiet over this week - only Powell will speaks at a conference this afternoon.
Today traders will be watching ADP employment changes (185k expected, 178k prior) and second quarter GDP (second estimate) which is expected to print at 2.7%q/q (annualized). On Thursday, the show will continue with the release of personal income and spending, which are both expected to have improved in July, expanding 0.3%m/m and 0.4%m/m respectively. Then the Fed’s favourite measure of inflation, core personal consumption expenditures, should have eased further in July as economists expect a reading of 1.4%y/y. Finally, July’s NFPs (180k exp and 205k prior), together with the complete jobs report, will be published on Friday.
By Arnaud Masset