FX Market Update - The dollar is nearing the end of the week trading mixed against
most major currencies—within narrow ranges—and heading for a slight net decline
since last Friday (Bloomberg dollar index and DXY down 0.8% and 0.6%,
respectively, for the week). The risk mood this morning is rather neutral with limited
developments of note since the North American close; Asian equities ended in the
green while those in Europe are mixed and US futures point to slight gains at the
open. Chatter around stimulus discussions between the GOP/WH and Democrats
may lead to some choppy price action to close out the week as it seems that they’re
very slowly inching toward a deal. The GBP is flat for the day as retail sales figures
came in in line with consensus expectations, yet negative rate bets for the BoE
remain unchanged after yesterday’s meeting minutes revealed that the bank is
looking into how negative rates could be implemented effectively. The JPY continued
to make up ground as it aims for the 104.19 mark that stands as its strongest level
since mid-March on speculative buying and with Japanese markets closed on Mon/
Tue for holidays. Elsewhere, the NZD challenging the yen at the top of the majors
with a 0.4% on economic cheerleading by the country’s finance minister, while the
AUD sits unchanged for the day; the RBA’s Debelle speech on Monday night (ET)
will be closely watched for the possibility of (or pushback against) further mon-pol
easing in the near-term. Crude oil prices and most other major commodities are
marginally better bid this morning but with little impact on the more commoditysensitive crosses; the CAD, MXN, and NOK are all trading essentially flat for the day.
Today’s US data calendar is relatively bare outside of the U Mich survey at 10ET but
we do get a trio of Fed speakers on tap with Bullard at 10ET, Bostic 12ET, and
Kashkari and 15ET. Bullard may provide a broad macro discussion that sets the
market tone for the day while Kashkari will likely be questioned on his dissent at this
week’s FOMC meeting—he preferred that the Committee indicate that it will leave
rates unchanged until core inflation has reached 2% on a sustained basis. That is,
Fed policy may still be considered accommodative at 1%, for instance; Kashkari
doesn’t just want accommodative policy, he would prefer near-zero rates until
inflation signals are firmer.
• USD mixed against majors in uneventful overnight session; tracks weekly loss.
• CAD steady around mid 1.31s ahead of Jul/Aug retail sales print at 8.30ET.
• EUR unchanged amid no domestic developments, follows market mood.
• GBP aims for 1.30 mark; retail sales match expectations.
• JPY leads ahead of Japanese holidays; targets late-Jul high.
• AUD steady in low 0.73s; NZD out-performs on rebound optimism.
• MXN trades in narrow range, holds yesterday’s firm push below 21.
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