Monday, July 31, 2017

U.S. Dollar weak entering August slowdown as Europe vacations

USD
The U.S. Dollar starts the week in familiar ranges after a week of underwhelming data and doubts over the timing of upcoming gradual hiked by the Fed. In comparison, the Euro has improved to the best levels since the start of 2015 and is establishing itself as the biggest beneficiary of economic indicators on the rise as well as the chances of central bank policy tightening. As a result, the greenback is down 3.6% against the shared currency for the month of July. On this last day without any significant releases, we do not see much opportunity to turn the trend.
Tax reform is now once again on news headlines after the failure by the Senate last week to work on healthcare overhaul. Markets are trading at an all-time high so we shall see if the discussion moves the FX flows in any way as participants react. We see Pound as volatile this week ahead of the Bank of England meeting and labor numbers for the U.S.

EUR
The Euro continues its appreciating momentum following last week’s spikes caused by solid economic figures. Retail Sales, CPI, and unemployment have all provided the Euro with enough of a boost to hit levels not seen in over two years.
Currently, banks are revising their currency outlooks since the strengthening that is taking place cannot be ignored while the dollar dwindles based on more uncertainty on our side. We are certainly not one of the banking institutions that ever believed the Euro would fall to parity with the dollar, but we have revised our outlook upward and believe it will take many winning factors for the dollar to change the trend in the next six months. Gross Domestic Product for the continent out tomorrow would have to disappoint to cause any Euro trouble.

GBP

Sterling increased by 2.3% in value against the buck in July primarily enjoying the stabilization of government after the surprise results of the June 8th elections as well as the struggles on the American end. The BOE will meet on Thursday and many are already predicting a dovish tone in which the officials will admit that inflation is just not where it needs to be for any tightening to occur. August will be slow in terms of news as even Brexit negotiators take off.

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    CapitalStars

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