USD

The Dollar Index is up around 0.5% this morning as it continues to build momentum following a steep selloff in the first half of July. As of this morning, the index has gained over 2.6% over the last two weeks since falling to the July low.

Today's rally has been driven by a broad sense of risk aversion following disappointing manufacturing numbers out of Europe and Asia. Markets will be keen to see the June read of the US ISM Manufacturing PMI at 10:00 AM EST after May's figure indicated the fastest contraction in the sector since May 2020. 

The consensus estimates point to a slight uptick in June for the index but still show a contraction in US manufacturing for the ninth consecutive month.  

EUR

The Euro is down for the second straight session as traders assess Europe's latest manufacturing and employment figures.

European manufacturing continues to falter, with July's Eurozone manufacturing PMI falling to a three-year low following declining PMIs in Germany, Italy, France, and Spain. Higher borrowing costs, weaker demand, and falling new orders contributed to the contractions.

On the other hand, June's Eurozone unemployment rate fell to a record low of 6.4%, and the youth unemployment rate reached an all-time low of 13.8%. Germany's unemployment rate declined to 5.6%, lower than expected, while Italy's jobless rate fell to 7.4%, the lowest since April 2009.

GBP

The Pound is pulling back this morning following the latest manufacturing and housing data out of the UK.

In July, the UK Manufacturing PMI fell to 45.3, the lowest so far this year and the fifth-consecutive monthly decline. Manufacturing output, new business, and employment levels all contracted, underscoring the sector's weakness.

On the housing front, the Nationwide House Price Index fell 3.8% year-on-year, matching market expectations. The decline is the steepest in 14 years as rising rates continue to weigh on the housing market. On a monthly basis, the index dropped 0.2% in July.

JPY

The Yen is down for the third-straight day ahead of the Wall Street opening on the heels of fresh Japanese manufacturing and unemployment numbers.

Beginning with manufacturing, the au Jibun Bank Japan Manufacturing PMI registered at 49.6 in July, showing the sixth monthly contraction of 2023, with May being the lone expansionary month this year. Meanwhile, Japan's unemployment rate dropped to 2.5% in June, in line with market expectations and the lowest since January.

Also crossing the wires this morning, several Japan's government ministers sought to clarify that the latest BoJ decision on its yield curve control was not a step towards a tightening of monetary policy, echoing comments from BoJ Governor Ueda in the aftermath of the decision.

CAD

The Loonie is on the back foot this morning, down over 0.6% as weak manufacturing data from across the globe boosts demand for the safe-haven Greenback.   

USD/CAD traders now await the latest manufacturing data out of Canada at 9:30 AM EST, followed by its US counterpart soon after. The July print of Canada's S&P Global Manufacturing PMI is expected to slightly tick up to 48.9 from June's 48.8, marking the fourth monthly contraction since March.  

Meanwhile, this morning's risk-off mood has also taken a bite out of the oil rally, with WTI futures pulling back around 0.55% heading into the North American session.

MXN

The Mexican Peso is down over 0.7% today versus the Dollar, the second-straight day in the red, as this morning's market unease weighs on EM currencies.

On the data front, Mexico's Business Confidence index slightly increased to 53.6 in July, up from June's 53.3 and remaining at its highest since 2019. However, the headline event on Mexico's calendar today is July's manufacturing PMI – set for release at 11:00 AM EST. The index has shown monthly expansion in the sector for nine of the past ten months as the Mexican economy continues to show signs of strength.

BRL

The Brazilian Real is retreating this morning, down over 0.75% in the leadup to key manufacturing PMIs out of Brazil and the US later this morning. Prior to the PMI numbers, BRL traders got a look at Brazil's latest industrial production data.

Brazil's industrial production rose 0.1% month-on-month in July, beating market expectations for a 0.1% decline but still the lowest read since February. The index showed mixed results, with output increasing in some sectors, such as extractive industries and clothing, while declining in others, like petroleum derivatives and machinery. Meanwhile, from a year-on-year perspective, production increased 0.3%.   

CNY

The Yuan is down over 0.25% heading into the Wall Street open as traders digest the latest dose of weaker-than-expected manufacturing data out of China.

China's manufacturing activity contracted in July, with the Caixin General Manufacturing PMI falling to 49.2, a six-month low. The result disappointed markets who anticipated the index to instead point to a third-consecutive month of expansion. The decline can be attributed to a drop in new orders and foreign sales, while employment declined for the fifth month in a row.

Meanwhile, a new Reuters report indicates China's currency regulators have asked some domestic banks to reduce or delay US Dollar purchases to slow down the Yuan's depreciation.