The United States Dollar shook off President Trumps 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 rise to 0.43 in June. However, the good news was significantly counter-balanced by a 0.6% reduction in existing home sales. The good 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 rumours 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, the United States turns to a fairly quiet domestic docket with only Markits Manufacturing and Services PMI figures and Richmond Fed’s Manufacturing Index to excite markets.