USD

The US Dollar is taking a slight step back this morning after posting its fifth-straight weekly gain on Friday, putting the Greenback in a strong position for the month. However, today's movement has been relatively muted as the US calendar is mostly empty until tomorrow.

Looking ahead, July's existing home sales report is scheduled for release at 10:00 AM EST tomorrow and is expected to decrease slightly to 4.15M from the 4.16M posted in June. US existing home sales have declined on a monthly basis in 15 of the past 17 months as homeowners choose to hold onto their properties.

EUR

The Euro is off to a strong start this week, up by over 0.3% against the Dollar as EUR/USD aims to break a six-day losing streak.

This morning, producer prices in Germany showed a significant year-on-year decline of 6.0% in July, marking its first deflation since November 2022. A 19.3% drop in energy prices, particularly electricity, had a significant impact on the result. Excluding energy, producer prices increased by 2.0%, driven by rises in food, appliances, and machinery. Additionally, prices fell by 1.1% month-on-month in July, marking the third consecutive month of deflation.

Meanwhile, according to an Ifo survey, Germany's residential construction downturn worsened in July, with a record number of companies reporting declining orders.

GBP

After retracting on Friday due to a disappointing retail sales report, the Pound is back in the green today as it enters the North American session. Despite Friday's decline, GBP/USD still posted its first weekly gain in a month, thanks to robust employment data and signs of progress in the BOE's battle against inflation.

The UK calendar is empty today, so Pound traders will be looking ahead to Wednesday's preliminary UK PMIs for August. There are also some minor data points scheduled for release tomorrow, including UK public sector borrowing and CBI industrial trends orders. However, neither of these is expected to significantly impact the Pound's performance.

JPY

The Japanese Yen is declining this morning and hovering near a nine-month low despite today's relative weakness in the US Dollar.

Earlier, Japan's Kyodo news agency reported that Japan's Ministry of Finance is set to increase its assumed long-term interest rate from 1.1% to 1.5% for the fiscal year 2024/25. The revision follows the BOJ's recent decision to ease up on its yield curve control, which led to higher government bond yields. As the world's most indebted nation, the higher borrowing costs will only add to the Japanese government's budgetary challenges moving forward.

CAD

The Loonie is up by over 0.3% on the day, rebounding from an 11-month low seen last Friday and aiming to gain ground against the Greenback for the first time since August 11.

According to Statistics Canada, new home prices showed a slight month-over-month decline of 0.1% in July after two consecutive months of growth. Victoria experienced the most significant monthly drop at -0.8%, followed by Greater Sudbury, Regina, and Ottawa. On a yearly basis, new home prices decreased by 0.9%, with Victoria and Edmonton seeing the largest declines, while Québec, Calgary, and St. John's reported yearly increases.

MXN

Despite closing the week with three consecutive winning days and an impressive retail sales report, the Mexican Peso still ended the week in the red. With less than two weeks to go in August, USD/MXN is up over 1.5% for the month. Therefore, the Peso faces an uphill battle ahead if it hopes to avoid its first losing month against the Dollar since April.

Looking ahead, Mexico's economic calendar is empty until later this week when three significant releases are scheduled. Mid-month inflation and Banxico's latest meeting minutes are both slated for Thursday, with GDP on deck for Friday.

BRL

The Brazilian Real is edging higher this morning thanks to a softer Dollar and a slight uptick in risk sentiment. The Real has been under pressure over the past three weeks as the BCB initiated its rate-cutting cycle, while markets speculate that the Fed may keep rates higher for longer.

It will be another quiet week regarding economic data out of Brazil until Friday when inflation, consumer confidence, and foreign investment numbers are all on the docket. In the meantime, BRL will likely move in response to the fluctuations of the US Dollar and the overall market mood, particularly any headlines concerning China's economic situation.

CNY

The Chinese Yuan is up around 0.2% against the Greenback this morning as traders digest the surprising decision by the PBOC to cut rates less than expected as the Central Bank continues its tight-rope walk of balancing the need for economic stimulus with avoiding excessive currency devaluation.

The PBOC announced its decision to drop its 1-year loan prime rate by 0.1% to an all-time low of 3.45%, although markets expected a 0.15% cut. Meanwhile, and perhaps more surprisingly, the Bank unexpectedly elected to keep the 5-year rate at 4.2%. Given the struggles surrounding China's property sector, markets widely expected a 0.15% to the five-year rate, given its influence on the country's mortgage rates.