FOREX: USD Resumes Spell of Weakness on Fed Speculation, Technical Break
Aug-06 17:58
- The USD resumed the recent spell of weakness Wednesday, helping the ICE USD Index through the post-NFP low. Prices have also broken interim support at the 50-dma - a level that had drawn notable focus through the YTD downtrend and helped define the downtrend. EUR/USD topping the Friday high and layered resistance between 1.1597-00 further triggered USD selling.
- Interjections from potential next Fed chair Hassett helped weigh on the USD, as he voiced his support for a more Greenspan-like approach to policymaking, with a lesser focus on consensus-forming. This led markets to more quickly price in rates conforming to Trump's preference for easy policy. A later Bloomberg report that suggested Trump was being advised to appoint an interim Fed governor that can skip the Senate nomination process made little impact on pricing - although the expedited timeline could mean a new Trump appointee is installed ahead of the September rate decision.
- Resilient GBP/USD comes despite the NIESR estimates out earlier today that suggests the government are facing a more dire fiscal picture in Autumn than previously expected - suggesting markets are well priced for sharp spending cuts and/or tax rises at the next Budget. Instead, it's the BoE decision Thursday that could be of more consequence, and in particular the vote split: 2-5-2 (50bps cut, 25bps cut, unch) is the modal consensus - and we flag that the baseline projections may become less
useful as a communication tool going forward - and as such, less market relevant. EUR/GBP remains in a nascent uptrend, evident in the recovery from last Thursday's low. Key resistance and the bull trigger remains at 0.8769, the Jul 27 high. - Focus Thursday turns to the ECB's economic bulletin, US weekly jobless claims and unit labor costs and the latest Chinese trade balance numbers. Fed's Bostic is due to be addressing monetary policy shortly after the BoE rate decision.
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TARIFFS: White House Says 12 More Tariff Letters Today; Rtrs Says EU Won't Get
Jul-07 17:47
White House Press Secretary Leavitt says in today's briefing that there will be trade letters coming today for 12 more countries in addition to the Japan and South Korea letters already published (imposing 25% tariffs on both effective August 1). Additionally there will be more letters sent in the coming days, she says.
- She didn't reveal which countries would receive letters, but said they would be posted to President Trump's Truth Social account.
- Leavitt confirms that today Trump is set to sign an executive order delaying the July 9 tariffs to August 1.
- However, Reuters is reporting the EU won't be one of those countries receiving a letter, at least, not immediately - Euro recovering a little on this: "[RTRS] EU WILL NOT BE RECEIVING LETTER SETTING OUT HIGHER TARIFFS FROM THE UNITED STATES, SAY EU SOURCES"
US TSYS/SUPPLY: Postponed Bill Auctions To Close At 2:30pm
Jul-07 17:40
Treasury says re today's postponed bill auctions, which were originally due to have closed at 11:30am: "The competitive portions of today's 13-week (912797QE0) and 26-week (912797RH2) bill auctions will close today at 2:30 p.m. ET, due to a technical issue that has now been resolved. The noncompetitive portions of both auctions have been completed."
