Analysts at Westpac noted that the US dollar strengthened in the London morning Friday, only to fade into the weekend New York close.
Key Quotes:
"EUR/USD slipped half a cent in late Sydney/early London trade to 1.1615 but then rose steadily to above 1.1685 by the NY close. Over the weekend, German press reported that Bundesbank president Weidmann warned the German government that the economy was slowing more than expected."
"AUD, NZD, CAD and GBP all followed similar trajectories to the euro. AUD/USD slipped from 0.7415 to a London low of 0.7368, only to rally back to 0.7420. NZD/USD wasn’t quite able to recover all the ground it lost in London, steadying around 0.6760, -0.3% over the full trading day. This saw AUD/NZD gain 0.4% to 1.0970 by Monday morning."
"GBP had to absorb President Trump’s denial of his view on a US-UK trade deal in his interview with The Sun, as in the press conference with UK PM May, he said that the US would welcome a post-Brexit bilateral trade deal. There was also a speech by Bank of England deputy governor Cunliffe, who argued for a cautious approach to raising rates. After all the headlines, GBP/USD emerged a little stronger over the day, around 1.3230."
"USD/JPY price action was a little different, rebuffed at 112.80 and starting the week around 112.20, perhaps capped by softer US yields."
"Fedspeak came from Kaplan, who expected 1-2 more hikes this year but was concerned about trade, and Bostic, who saw inflation approaching 2% as a sign of economic health. The Fed’s Monetary Policy Report – which Chair Powell delivers this week to Senate (Tue) and House (Wed) - contained nothing very different from recent upbeat Fed commentary."
"US consumer sentiment (University of Michigan) fell from 98.2 to 97.1 in July (vs 98.0 expected) – a six-month low. Inflation expectations fell, the 1yr ahead measure down from 3.0% to 2.9%, and the 5-10yr ahead measure from 2.6% to 2.4%."
"US 10yr treasury yields fell from 2.86% to 2.83%, and 2yr yields fell from 2.60% to 2.57%, the moves well underway before the inflation expectations data. Fed fund futures yields continued to price 1 ½ more hikes in 2018."
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