Articles: usd 2021-07-05 00:00

Dollar bulls

The dollar has enjoyed a strong start to July and a healthy June nonfarm payrolls release should keep the dollar bid against the low yielders at least. Though the unemployment rate was higher than expected, progress in jobs gains will be welcomed by the Federal Reserve and likely to keep US money market rates biased towards a 2022 rate hike. The sluggish dollar performance on Friday probably owed to profit-taking ahead of the Independence Day holiday and some large FX option expiries.
US trading will likely be quiet in a shortened holiday week. The calendar is quite light, with the highlight probably being the release of the FOMC minutes on Wednesday evening. Much focus will be given to how the doves and hawks are arguing their cases especially the seven members casting their Dots for the first-rate hike in 2022. Internationally, the focus will be on whether the G20 on Friday formally signs off on new global minimum tax standards. Well also be interested in Chinese Caixin PMI readings (Wednesday) and inflation readings (Friday). On the latter, investors will examine whether there remains a gulf between the PPI and CPI (9% YoY versus 1.3% respectively), meaning that Chinese policymakers will do their utmost to limit input prices.
ing.com
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