US Dollar Continues Q3 Slump While EUR/USD, Stocks Jump After NFP

THE US DOLLAR’S Q3 SLIDE CONTINUES

The Q3 sell-off in the US Dollar is extending into a second week, and DXY is sliding further-below the support zone that we were following last week. Going along with this move of weakness in the US Dollar has been a continuation of the strength in equities that showed after Friday’s release of Non-Farm Payrolls from the month of June. Both the S&P 500 and the Dow Jones Industrial Average are trading at two-week highs ahead of this morning’s US market open, and this is setting the stage for what could be an interesting week across FX markets.

This week’s economic calendar has a couple of speeches from Mario Draghi (Monday and Wednesday morning) along with an appearance from BoE Governor, Mr. Mark Carney. The Bank of Canada hosts a rate decision on Wednesday, and Thursday brings US CPI data for the month of June, fresh on the heels of a six-year high that printed for the month of May. This puts all of the Euro, the British Pound, and both Canadian and US Dollars in focus for this week as we move deeper into the second-half of the year.

DAILYFX ECONOMIC CALENDAR: HIGH-IMPACT EVENTS FOR THE WEEK OF JULY 9, 2018

DailyFX Economic Calendar

Chart prepared by James Stanley

US CPI IN FOCUS

Last Friday’s NFP report was not bad. The headline number beat, but both the unemployment rate and Average Hourly Earnings came-in below expectations, so the takeaway was a mixed bag as there were both positives and negatives to take away. But the market response was not so balanced, as we saw the net impact of Dollar-weakness and equity strength, and this played out across the FX-spectrum with EUR/USD and GBP/USD both gaining; perhaps highlighting the ‘push point’ for the Greenback at the moment, which appears to be signs of inflationary pressure.

This puts the focus on the CPI print set to be released on Thursday morning. Last month saw CPI print at one-year highs of 2.8%, which is the highest level since February of 2012. This stronger show in inflation is what helped the Fed to take a hawkish outlook into that last rate hike in June.

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