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USD Broadly Weaker Leading into July 4th Holiday

By OFX

The USD is broadly lower today in quiet market trading as we go into the US July 4th holiday tomorrow. US/China trade tariffs will start on July the 6th which will keep FX traders on the sidelines this week. We have a busy week of data releases from the US this week. We’ll see US Factory Order figures today then ADP Employment, ISM Trade data, FOMC minutes, NFP data for the rest of the week.

The Loonie is trading slightly higher today as USD/CAD trades at last week’s low. Firming expectations for a July rate hike from the BoC is keeping the CAD supported. Risk comes in ahead of domestic trade and employment release this Friday.

The EUR is consolidating within Monday’s range. Eurozone data was mixed today. PPI increased 3.0%, the highest since May 2017 while retail sales came in flat. Political uncertainty from Germany continues to put downwards pressure on the EUR. However, Chancellor Merkel appears to have regained control over her Junior Coalition partners which should ease election worries.

The dollar strengthened throughout the day yesterday as trade war fears lingered and concerns for the stability of Merkel’s government intensified. Trump said yesterday that “if the WTO doesn't treat us properly, we will be doing something". Global equities opened lower on the day and the dollar remained broadly strong throughout London and New York sessions on Monday.

US ISM Manufacturing PMI also printed better than market forecasts on Monday at 60.2 vs. 58.2, providing some extra support to the greenback. There isn’t any major data releases due for today from the US and with the World Cup in full flow and a US bank holiday tomorrow, it might be a steady session today, but with tariff tiffs and developing political instability in the UK and Germany, we can’t rule out volatility entirely.

Construction PMI data numbers were released today at 53.1 vs the forecasted 52.6. GBP/USD opens at 1.3143.

AUD/USD pair strengthened today following the RBA meeting. The pair hovering in the 0.7380 region and up nearly 50 pips for the day. The Aussie gained a bit of momentum following the Reserve Bank of Australia statement. The central bank decided to keep rates unchanged while the statement was considered as “not so dovish.”

Above 0.7400, the next strong resistance is seen at 0.7440/45 and then at 0.75.00.

NZ business confidence printed slightly weaker than expected overnight. It prompted NZ Finance Minister Robertson to make a few comments in support of the economy following a recent run of poor confidence indicators. NZD/USD has bounced back following the sell-off overnight, however, as risk sentiment turns slightly more positive.