The United States Dollar shook off President Trump’s Friday tweets in overnight trading to begin its recovery against a number of the major currencies. The US Dollar Index is up 0.28% this morning, as demand for the greenback returned to the market
The Catalyst for the reversal of fortunes, albeit small, was the upbeat data from the Federal Reserve Bank of Chicago which showed the National Activity Index rose to 0.43 in June. However, the good news was significantly counter-balanced by a 0.6% reduction in existing home sales. The excellent start continued for the Greenback, however, as commodity currencies began to depreciate against the USD when China announced it would inject $74b of liquidity into the market, further easing their accommodative monetary policy. The CNY immediately plunged 0.4% which contributed to declines across the board for commodity currencies. The Greenback strengthened further again, as rumors of tweaks at the Bank of Japan to monetary policy reverberated around the market, driving global bond yields higher and increasing demand for the US Dollar. Overall, it was a perfect storm for the United States as sentiment dictated direction for much of the day.
Moving into Tuesday morning a relatively quiet domestic docket for economic releases. Markits Manufacturing and Services PMI figures will be released at 9:45. Followed by the Richmond Fed’s Manufacturing Index at 10 am.