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Dollar rate today live: What is happening to the dollar today?

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dollar rate exchange

As you know, the dollar exchange rate has been lagging lately. We all wish wars would end as quickly as possible, but sometimes they last for years, sometimes decades. The Fed’s war on inflation is no exception. Investors are eagerly waiting for the labor market to finally start cooling down. And it isn’t thinking about it. A 528,000 gain in employment in July showed that the labor market is still hot as a stove. And if so, inflation will remain hot for a long time to come. 

Dollar rate today live – what’s going on?

A strong labor market report will dissuade investors that the Fed can only raise the federal funds rate to 3.5% and then start lowering it. In fact, even 4% now doesn’t look like a ceiling. Surely the September FOMC meeting will consider a 75bp increase in borrowing costs, which should cool the fervor of the S&P 500 bulls, inflate Treasury yields, and strengthen the U.S. dollar. 

Such asset dynamics will lead to a tightening of financial conditions. This is what the Fed is pushing for, but the central bank still has a lot of work to do. Especially considering the fact that the index has been rising lately.

“Bears” on EURUSD kept two of their key trump cards in hand: the divergence in the monetary policy of the ECB and the Fed, as well as the high demand for shelter assets amid the difficult economic and geopolitical situation in the world. Expectations for strong statistics on U.S. inflation could become a new catalyst for a major currency pair peak. 

Bloomberg experts expect a slowdown in consumer prices in July from 9.1% to 8.7% and an acceleration in core inflation from 5.9% to 6.1%. The indicators will continue to be at elevated levels, hinting that the Fed is far from having done its job yet.

Technically, on the EURUSD daily chart, the pair’s drop below fair value at 1.019 indicates that the bears’ intentions are serious. Failure to return to this level is a reason to sell the euro against the U.S. dollar in the direction of 1.007 and 1.



Forex

US recession and stock market. Thomas Barkin, Fed: Recession is virtually impossible

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us recession and stock market

The U.S. recession and the stock market are closely linked. The key U.S. stock market indices – Dow Jones, NASDAQ and S&P 500 – have resumed their growth, and this movement already raises a lot of questions. To remind you, the U.S. stock indices have been rising for several weeks in a row and even updated their previous local highs, recovering by 40-50% after falling in recent months. 

Thomas Barkin, one of the members of the Board of Governors of the Fed, said that inflation is declining because of the leveling of demand. He is probably referring to the core rate, which has really stopped rising. But the core continues to be at its highest level in 40 years, and we wouldn’t say at this time that inflation is slowing. 

On US recession news Barkin also said that inflation will not fall immediately, sharply or quickly, and that the Fed is unlikely to get help from supply chain fixes or other world events. He also noted that the U.S. economy is not in danger of a recession, and at this time there is only a slight slowdown in GDP growth, as a recession is not possible with 400,000 new jobs created each month (NonFarm Payrolls). 

In light of this statement and earlier statements from Powell and Yellen, Friday’s NonFarm Payrolls report becomes even more important than before. Recent reports have indeed shown the strength of the U.S. labor market, but what if Nonfarm Payrolls start to decline? What will the Fed members say then, how will the U.S. stock market move? We still believe that despite the strong upward correction, there is still a long way to go before the downtrend is over.



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Euro rate chart: the euro is not going into a trap

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usd to euro rate

No matter how much FOMC officials try to convince investors of the Fed’s commitment to aggressive tightening of monetary policy, so far the financial markets are not taking the Central Bank’s bait. How has this affected the euro rate chart? 

U.S. stock indices started rising again and hit a peak in the last two months. The reason for this is the expectation that the Fed will introduce new mechanisms to stop the fall. At the same time, there are no guarantees that the Fed will take drastic measures. Owing to the fact that the situation is ambiguous and nobody makes accurate forecasts, the EURUSD exchange rate constantly fluctuates in one direction. The pair cannot go beyond the consolidation range at 1.01-1.03.

USD to euro rate: what’s going on in the currency market?

Investors are hoping the report on the U.S. labor market in July will give some clarity. No one wants to get ahead of the curve before it is published. In such a situation in the past, one or several big players could provoke a false-break. Statistics were used to implement that idea. Now nobody wants to take risks. The Eurozone data does not lead to serious fluctuations in EURUSD.

In particular, the fact that German manufacturing orders have been declining for the fifth month in a row might have dealt a blow to the euro. However, the bulls in the main currency pair found it positive: in fact the index fell by 0.4% m/m against a forecast of -0.9%.

Meanwhile, consumer expectations for future inflation remain at elevated levels in the eurozone. Respondents expect gross domestic product to contract by 1.3% over the year and unemployment to rise to 11.5%. This is in stark contrast to the central bank’s forecasts. It does not expect a recession and sees the unemployment rate at 7% through 2024.

FOMC officials are 100% convinced that if monetary policy is tightened, the markets will start to fall. But this is a natural phenomenon. No one has canceled the market cycle. It’s a pattern. So we should not expect domestic consumption to decline and inflation to come to a complete halt.



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European stock market news: Europe started to lag behind the rise in U.S. stock prices

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european stock market news

Current European stock market news: U.S. stock futures rose slightly Friday, helped by tech stocks as investors prepare for the monthly U.S. jobs report, which is likely to revive the recession debate.

Futures on the Nasdaq 100 rose, signaling the underlying indicator could reach a 20% gain from its June low and meet the technical definition of a bull market. The S&P 500 futures were up modestly.

European stock market analysis

European equities were flat, but they started to lag their “American counterparts” and the daily candlesticks clearly show it. The Stoxx50 index is still undecided as media firms and insurers drag it down.

Investors are returning to defensive stocks, especially tech stocks, as falling bond yields make long-term assets more attractive. 

The global stock index is poised for a third weekly gain, and is approaching a two-month peak in recovery from bear market lows, helped by solid earnings at U.S. companies. 

U.S. jobs data on Friday is the next key point for the markets. Likely hiring, according to Anne Wong, Bloomberg Economics’ chief U.S. economist, things eased in July, but the labor market remains in line with a growing, not-recessionary, economy and the Fed will continue to raise rates.

Separately, Democrats agreed to a revised version of their tax and climate bill adding a new 1% excise tax on stock buybacks.



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