Daily Currency Update

USD - US Dollar 

The market trend leading up to the weekend appears to be consolidation. The US dollar, which experienced significant losses of approximately 2.4% throughout the week, is showing signs of moderation today. Stocks are displaying a mixed performance with narrow fluctuations. Major bond markets are slightly weaker. This morning, there is a release of inflation-related data. It is expected that US Import Prices for June will decrease by 0.1% compared to the previous month. The preliminary July U. Michigan Sentiment data is anticipated to show a modest improvement, with a consensus of 65.5, up from 64.4 in June. The inflation expectations component of this report may attract some attention. Although the overall performance of the USD has increased today, it is on track to end the week on a weaker note. Following a period of inactive and uncertain trading within a limited range, the market may be on the verge of entering a more dynamic phase of movement. The current conditions suggest that the USD losses might extend by 2-3% or possibly even 5% over the next few months.

CAD - Canadian Dollar

The CAD has been part of the overall rally against the USD this week, although gains have been muted. Compared to other major currencies, the CAD's increase of 1.1% is the weakest and falls short of its commodity-related counterparts. It's possible that the CAD is experiencing some spill-over effects from the USD, as investors believe that both the Federal Reserve (Fed) and the Bank of Canada (BoC) will follow similar policy cycles. While this may hold true in a general sense, there are other factors that could potentially contribute to the CAD's relative strength against the USD in the coming months. If the Fed's interest rate cycle is indeed reaching its peak, which appears highly likely, it could lead to an improvement in risk assets, thereby providing some additional support for the CAD. Furthermore, a weaker USD is typically favorable for commodity prices, which should also support the CAD. Various factors already indicate that the CAD should exhibit some strength. The estimated fair value for the CAD this morning stands at approximately 1.2908. Observe the USD/CAD trends.

EUR - Euro

The report on the European Central Bank's (ECB) policy decision from June 14th, which was released yesterday, reinforces the expectation of further interest rate hikes by the end of this month and again in September, particularly due to the persistent growth in core prices. The minutes also indicate that policymakers are cautious about reducing rates too rapidly. The prolonged period of higher interest rates is likely to be supportive of the EUR in the medium term.

GBP - British Pound

The GBP has entered a phase of narrow consolidation, with a tight range. As there is no data being released today and market attention is shifting towards the upcoming UK Consumer Price Index (CPI) report on Wednesday, which will have an impact on expectations for the Bank of England (BoE) in August, it is probable that further consolidation will continue in the near term.