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Key Takeaways:
Dollar Index fell to a multi-month low of 103.402
U.S. retail sales in June did not grow, pointing towards potential Fed rate cut in September
Fed’s Beige Book, housing starts, and building permits data will be important indicators of economic weakness
Sterling climbed to a one-year high against USD after UK inflation data showed a higher increase than expected
ECB expected to maintain current rates with potential deposit rate cuts in September and December
Yen strengthened sharply against USD amid talks of possible intervention by Japanese authorities
Concerns over potential implications of a Trump presidency on U.S.-China relations led to USD/CNY drop from eight-month highs
The yen rose sharply as Japanese authorities intervened to support the currency- UK inflation rose more than expected, affecting rate cut bets
- Euro rose benefiting from dollar weakness ahead of ECB meeting
Traders scaled back bets of a rate cut from the Bank of England in August
The dollar declined against the yen, leaving markets alert for potential intervention from Tokyo- Japan may have spent nearly 6 trillion yen on currency market intervention last week
- The dollar eased against a basket of currencies, while the euro reached a four-month high
Market expectations for a Federal Reserve rate cut in September remain fully priced in
The New Zealand dollar rose after data showed high domestically driven inflation, with bets on multiple rate cuts from the Reserve Bank of New Zealand
Global currency market impact discussed
Dollar Weakness and Potential Fed Rate Cut:
- Dollar Index fell to a multi-month low, signaling weakness in the currency
- U.S. retail sales stagnation in June could lead to a potential rate cut by the Federal Reserve in September
Sterling Strength and UK Economic Data:
- Sterling climbed to a one-year high against the USD after UK inflation exceeded expectations
- UK inflation data impacted rate cut bets for the Bank of England in August
Yen Strength and Intervention Speculation:
- Yen strengthened sharply against the dollar, raising concerns of potential intervention by Japanese authorities
- Japanese authorities intervened to support the yen, leading to a sharp rise in its value
- The dollar declined against the yen, prompting vigilance for potential intervention signals
ECB and Eurozone Outlook:
- ECB is expected to maintain current rates with possible deposit rate cuts later in the year
- Euro rose due to dollar weakness ahead of the ECB meeting
Global Currency Market Overview:
- Concerns over U.S.-China relations impacted the USD/CNY trading
- New Zealand dollar rose on domestically driven inflation data and expectations of Reserve Bank of New Zealand rate cuts
- Discussions on global currency market impact were prevalent