The US dollar remains strongly supported thanks to talks of tax cuts. President Trump shared more details on the GOP proposal for fiscal reform and promised that they will get this done by the end of the year. US final GDP was also upgraded from 3.0% to 3.1%, supporting Fed December hike prospects. Core PCE price index, along with personal spending and income data, are due next.
The euro was slightly weaker against its peers as data came in weaker than expected. Germany’s GfK consumer climate index fell from 10.9 to 10.8 instead of improving to the consensus at 11.0 while the preliminary CPI showed a meager 0.1% uptick as expected. German retail sales and French consumer spending are due today but the flash CPI readings from the region could generate more market reaction.
The pound was able to make a bit of a recovery even after BOE head Carney confirmed that the central bank can’t do much to reverse Brexit effects. This was followed by a speech by UK PM May who said that work is needed to restore finances back to health. The attention could shift back to data today as the UK will release its current account balance and final GDP reading. Net lending to individuals and mortgage approvals data are also lined up.
The franc caught a bid despite the lack of top-tier data as risk aversion was still present in the markets. The KOF economic barometer is due next and it is expected to improve from 104.1 to 105.5, which might allow the Swiss currency to extend its wins.
The yen had a mixed run as it reacted mostly to currency-specific factors while waiting for more clues on the snap elections. The prospect of an attack from North Korea is keeping the lower-yielding currency supported but traders are also wary of potential downside surprises in today’s release of core CPI, household spending, retail sales, and preliminary industrial production data.
Commodity Currencies (AUD, NZD, CAD)
The Kiwi and Loonie were in a weak spot thanks to downbeat central bank rhetoric. Although the RBNZ kept rates unchanged as expected, their less upbeat outlook for growth due to a construction sector slowdown has put downside pressure on the Kiwi. Meanwhile, BOC head Carney sounded less optimistic than expected in his testimony, weighing on BOC hike odds for next month or December. Canadian GDP is due next and a 0.1% expansion for July is eyed. Chinese PMI readings are due over the weekend.