The U.S. Dollar is trading in mixed ranges once again as a variety of data points suggest different outlooks for the economy.
Overview
Following stronger-than-expected Consumer Price Index data, we have seen the buck dominate primarily from growing speculation that the Fed will be hiking interest by 75-basis-points in the next few meetings. Nevertheless, expectations, or rather fears, that it would get even more aggressive with a full 1.0% in their next gathering have started to subside. While Fed officials commit to their current path, they do not want to add further anxiety and other private banks feel the same.While Initial Claims this morning came in lower than expected, Retail Sales for August advanced just slightly, and Industrial Production contracted unexpectedly. Meanwhile, Business Outlooks in the Philadelphia region differed in mood from the Empire Manufacturing survey as the latter was more optimistic than expected. The Fed Outlook in Philadelphia was supposed to show some positivity but came in showing a lot of anxiety over prices and supplies.Elsewhere, petro-currencies are suffering with oil prices going down based on the belief that demand will be down with countries announcing plans to shut down some activity in order to save on energy usage.
What to Watch Today…
- No major economic events are scheduled for today
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EUR ⇓
The Euro sees a bit of gain just getting away from some of the damage taken following inflationary concerns post-data. Officials from the European Central Bank as well as other finance ministers agree that interest rates should continue to be increased in upcoming months. More importantly, the EU is trying to coordinate measures to reduce the use of electricity by as much as 10.0% and reduce dependency on fossil fuels while it navigates the lack of commercial fuels from Russia.
The proposed regulation in the EU parliament has the support of President Ursula Von der Leyen, who oversees the legislative efforts aiming at coordination between governments. Profits from big energy are also expected to be taxed more. We shall see where all this takes the shared currency as the forecast becomes less clear.
MXN ⇓
The Mexican Peso strengthened on Wednesday, but it is once again dipping as global turmoil affects the market for fuels and other raw materials. Peso flows have been indicative of a world that has little clue where things are headed with a tough winter ahead and a plethora of speculation about what may occur in the Russia-Ukraine war.
While Latin America starts to revamp its economic plans based on a more leftist-isolationist doctrine that has spread from Mexico to Chile, expect these economies’ currencies to demonstrate the wild nature of getting the globalized system readjusted to a major natural resources provider being cut off in Russia. Watch out for Brazil also joining the fray of reformers unlike anything seen in decades, with the potential for Lula to return to the presidency. Those elections will be on October 2nd.
