USD hovers at key support/resistance mark
Daily Currency Update
The US dollar index (DXY) this morning hovered around the 104 mark, a key support/resistance point amid data releases and the BRICS summit. This week representatives from Brazil, Russia, India, China, and South Africa will gather at the BRICS summit to discuss economic events. There have been talks of a new currency being generated by these countries, backed by gold, to combat the USD as the world reserve currency. Markets are also closely eyeing a slew of data releases out of the US this week which include existing home sales, manufacturing Purchasing Manager’s Index (PMI) data, unemployment claims, and consumer sentiment data.Key Movers
In the Eurozone, German Producer Price Index (PPI) data comes in at -6% year-over-year and -1.1% month-over-month. This is a larger dip than expected with the monthly level anticipated to be down just slightly at -0.1%. This dip in PPI data indicates a strong deflationary signal, implying a weakening German economy and therefore good support for lowered interest rates in the Eurozone in the future.China’s central bank has cut the one-year prime loan rate from 3.55% to 3.45%, while leaving 5-year rates unchanged. The Chinese central bank rate cuts are in an effort to support their struggling economy.
The USD/CAD pair has been moving up very rapidly over the past month, currently hovering around the 1.35 range. The Canadian New Housing Price Index has fallen this month by 0.1% after two consecutive months of positive growth. This could indicate a slowdown in the housing sector. Canadian data to look out for this week is limited as the only release is retail sales numbers on Wednesday, August 23rd.
Expected Ranges
- EUR/USD: 1.0865 - 1.09137 ▲
- GBP/USD: 1.27103 - 1.27650 ▲
- AUD/USD: 0.63929 - 0.64214 ▲
- USD/CAD: 1.34960 - 1.35551 ▼