U.S. Dollar Drops, Focus on Federal Reserve at Jackson Hole
GBP
GBP/USD has climbed to 1.2958 (interbank), with GBP/EUR trading at 1.1733 (interbank).
The Pound continues to gain traction, supported by last week's stronger-than-expected UK economic data, which suggests the economy remains resilient and may dampen hopes for a BoE rate cut in September.
Friday's UK Retail Sales figures showed a 0.5% monthly increase and a 1.4% annual rise, leading traders to scale back expectations of a second consecutive rate cut.
Attention will now turn to the upcoming preliminary UK S&P Global/CIPS Manufacturing PMI for August, scheduled for Thursday.
No significant events are scheduled today
EUR
EUR/USD has rallied and is currently trading at 1.1040 (interbank), nearing a one-year peak.
The Euro remains robust as markets expect the ECB to gradually reduce interest rates. ECB President Christine Lagarde emphasized a data-dependent, meeting-by-meeting approach, avoiding any specific rate path commitment.
Tomorrow’s release of the final Eurozone consumer price index (CPI) for July, expected to remain stubborn at 2.6%, could influence the likelihood of the ECB implementing a second rate cut in September.
Additionally, the latest Eurozone PMIs will be released on Thursday, adding further context for the ECB's next steps.
No significant events are scheduled today
USD
The Dollar Index, which measures the U.S. dollar against a basket of six major currencies, currently sits at 102.11, marking a seven-month low.
The U.S. dollar has continued its downward trend as investors anticipate a dovish outlook from the Federal Reserve's July policy meeting, set for release on Wednesday.
In last month's meeting, the Fed held rates steady for the eighth consecutive session and projected only one rate cut this year, down from three cuts predicted in March.
Market participants will closely watch Fed Chair Jerome Powell's upcoming speech at the Jackson Hole Symposium for insights into the Fed's future policy direction.
Traders have largely priced in a 25-basis-point rate cut from the Fed in September, with a 24.5% probability of a 50 bp reduction. Futures suggest over 90 bps of easing by year-end.
Today’s Events (GMT+1):
14:15 - Fed Waller Speaks
CAD
USD/CAD is currently trading at 1.3670 (interbank), hovering near a one-month low.
The Canadian dollar has gained strength as expectations grow that the Bank of Canada will cut rates in September.
Oil prices have dipped, with Brent crude at $79.55 per barrel and West Texas Intermediate (WTI) down to $76.42 per barrel.
Canada's consumer price index for July, due tomorrow, will be closely watched, with the annual inflation rate expected to show a continued cooling trend from June's 2.7% figure.
Additionally, retail sales data for June will be released on Friday, with an anticipated decline of 0.3% based on preliminary estimates.
No significant events are scheduled today
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