Daily Currency Update

USD - US Dollar

Markets are displaying a cautious stance following China's release of loan data that fell below expectations, with new loans hitting their lowest point since 2009. This underscores worries about global economic growth. The Chinese Yuan (CNY) has also lost value, reaching its lowest value in a month. Global stocks are in decline, and bond markets are showing vulnerability. The US Dollar (USD) remains relatively strong due to subdued risk sentiment, with the dollar index facing resistance in the mid to upper 102 range. This resistance follows a notable recovery from the lows experienced around the time of the US Consumer Price Index (CPI) report. The recently released US CPI figures aligned largely with predictions, and further positive developments on the inflation are anticipated in the upcoming US Producer Price Index (PPI) data. Overall, the softer pricing data suggests that the already low possibility of a Federal Reserve rate hike in September has diminished even more.

CAD - Canadian Dollar 

The CAD has shown little movement overnight and weak risk-appetite maintains a bias towards further potential declines against the USD in the short term. Crude oil prices are also lower, adding to the CAD’s current negative sentiment. The current exchange rate remains notably divergent from its estimated fair value (1.3156 today), and there's limited motivation for investors to drive the CAD's value upwards while the prevailing risk landscape continues to be demanding. Observe the USD/CAD trends.

EUR - Euro

The EUR/USD pair has maintained a narrow range below 1.10 amid calm trading conditions. This comes after the Euro (EUR) experienced advances into the mid-1.10s yesterday, which were subsequently halted and reversed following the release of the US Consumer Price Index (CPI) report. While the EUR holds a positive outlook for the extended term, recent data on positioning and sentiment underscores that the long EUR position is already somewhat overcrowded. This saturation might be limiting the EUR's potential to progress without more compelling motivations.

GBP - British Pound

The GBP experienced an upward surge following the unveiling of robust UK economic activity data. The GDP figures for June showed a 0.5% increase for the month, surpassing the anticipated 0.2% rise. Additionally, the second-quarter GDP demonstrated a 0.2% quarter-on-quarter growth, exceeding predictions of stagnation. Various sectors of the economy, including manufacturing, construction, and business investment, exhibited significantly stronger growth than anticipated during this timeframe. The data's impact slightly contributed to the prevailing projections of a potential interest rate hike by the Bank of England (BoE) in September.