The U.S. Dollar remains on a weakening trend this morning as reaction continues to the inflationary growth, or lack of it, in the U.S. for the month of July.
The 0.0% monthly number has already been used by government officials, and economists as a sign of better health than surveys around confidence and optimism have shown. One big issue for the Fed has been appeasing the very high expectations for inflation going forward. This report certainly eases the worry over a too-hawkish Fed for the remainder of the year. It is perhaps more likely than ever that the economy will experience a softer landing than forecast.Nevertheless, it is not a guarantee that the Fed will slow down soon and start considering no more hikes into 2023. Minneapolis Fed President Neel Kashkari believes there is more room to hike as inflation remains at levels that are just “unacceptably high,” per his colleague Chicago’s Fed President Charles Evans. We shall see how officials come to a consensus again as we will need to wait until September 21st when they meet again. Per today’s indicators, the Producer Price Index for July failed to advance with an actual reading of (-0.5%) vs. 0.2% estimated. Thus far, equities getting the reprieve they wanted.
What to Watch Today…
- No major economic events are scheduled for today
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The Euro keeps advancing as the globe takes cues from lower inflationary pressures in the U.S. In Germany, the government has come up with a stimulus package to aid the economy. In a discussion over the government’s thinking, Finance Minister Christian Lindner explained that the dire situation facing the German economy requires this level of aid, highlighting how the supply-chain disruptions have particularly affected the EU’s wealthiest member nation.
We will monitor what other items can come up without affecting the current upward trend for the shared currency. It has not all been positive, yet the currency does not dwindle. This is certainly not July.
Sterling does not have much fueling or boosting its slight rise other than the U.S. dynamics dictating market flows. Friday GDP, the big mover, will make an impact and give us more guidance.