New York, NY: The US Dollar Index and Dow Jones FXCM Dollar Index have extended their gains today, amid a risk-off mode and unwinding of carry positions. Notably, the Japanese yen and Swiss franc have also strengthened. The stabilization of the dollar comes as the Bank of Canada is expected to cut rates today, with the greenback pushing against CAD1.38, a level not seen in three months. Despite soft interest rates, the US dollar continues to make gains, with the US 10-year yield slightly lower at around 4.23%. Concerns about a disappointing Eurozone PMI and a risk-off sentiment have widened peripheral premiums over core rates in Europe, impacting various emerging market currencies.
Equity markets are facing a challenging session, driven by poor earnings results and external factors like a typhoon leading to the closure of markets in Taiwan and the Philippines. European stocks, including the Stoxx 600, have experienced a decline of 0.65%, erasing gains from earlier in the week. US futures indices are also indicating a lower opening, while gold prices are seeing a slight recovery and September WTI stabilizes after recent plunges. The ongoing drop in US oil inventories and reports of wildfires threatening oil output in Alberta, Canada, are adding to market concerns.
In Asia Pacific, Japan’s PMI results have raised expectations of a rate hike next week, with the Tokyo CPI also eagerly awaited. The Japanese economy is showing signs of growth, with improvement in consumption and capex, alongside positive net exports. Australia’s composite PMI has eased for the fourth consecutive month in July, while the central bank keeps a close eye on next week’s quarterly CPI. Amidst these developments, the relationship between the US dollar, Japanese yen, and other currencies is undergoing significant shifts, impacting trade dynamics in the region.
In Europe, the eurozone composite PMI has fallen, with manufacturing continuing to be a drag on economic performance. Various countries within the Eurozone are experiencing fluctuations in their PMI and economic indicators, with the UK standing out for its recovery in the composite PMI. Additionally, the movement of the euro and sterling against the dollar is closely watched, as market dynamics continue to evolve in response to economic data and geopolitical developments.
Turning to America, US inventory and goods trade data are crucial for economists fine-tuning forecasts for Q2 GDP estimates. The Bank of Canada’s meeting is a key event, with expectations of a rate cut influencing market sentiment. In Mexico, CPI data is expected to follow a pattern of sticky headlines and soft-core measures. Meanwhile, the US dollar and Mexican peso are experiencing fluctuations, reflecting broader market trends and factors impacting currency valuations.
Overall, global markets remain volatile, with various economic indicators and external events shaping investor sentiment and trading patterns. The interplay between currencies, central bank policies, and geopolitical dynamics continues to drive market movements, with implications for investors and businesses worldwide.
