Daily Currency Update

USD - US Dollar

The USD is stabilizing following a drop from the highs against other major currencies yesterday. There isn't much significant news today, and the USD's rise might be due to the market's hesitance to make big moves ahead of Powell's remarks at Jackson Hole tomorrow. Global stocks are showing a positive trend, and bond changes are minimal; however, Treasuries are lagging. Crude oil prices are seeing a minor boost, while iron ore prices have declined. The data from yesterday indicated a downward revision of US NFP growth in the past year, but the decrease in job numbers (306k) wasn't as significant as predicted. St. Louis Fed President Bullard implied that due to robust US growth, the anticipated rate hike in September might materialize, and even hinted at the possibility of a rate as high as 6%. Currently, the market expectations don't surpass 5.50%, far from the 6% mark. This sets the stage for what the USD expects from Powell's statements tomorrow. Those bullish on the USD will be keen to hear that the FOMC meeting in September is still in play, and that interest rates might stay high for a longer duration. Without a decisive move towards higher rates, the USD might find it challenging to advance further. Later today, we'll see the weekly claims and data on July's Durable Goods at 8:30ET, followed by the KC Fed Manufacturing Index at 11ET. The market is likely to remain in a “wait and see” mode ahead of tomorrow's updates.

CAD - Canadian Dollar 

The CAD isn't performing as well today, mirroring the mild downturn seen in other commodity currencies. While consistent stock and crude prices might offer some stability to the CAD, the spreads have slightly shifted towards the USD, especially after yesterday's Canadian Retail Sales data. In the near term, expect trading to remain within a familiar range as the market anticipates Powell's input. Observe the USD/CAD trends.

EUR - Euro 

Overnight, the EUR/USD has seen limited movement as markets process yesterday’s decline due to weak PMI data. The lackluster data has slightly tempered the anticipation of an ECB rate increase on September 14th. Still, the market does factor in a small possibility of this hike and remains evenly split on the chance of another 25bps increase before the year concludes. Nonetheless, the narrowing of short-term yield spreads has diminished the potential for a significant near-term surge in the EUR.

GBP - British Pound

The GBP is experiencing a slight pullback today, as market wariness before Powell's upcoming comments counteracts the sudden rise from yesterday's low point. Recent CBI survey data from the UK, which indicates a softer retail landscape in August, could contribute to short-term challenges. However, the markets are likely to remain subdued as they await tomorrow's potentially impactful events.