USD

The Dollar's freefall continues this morning due to recent inflation and job figures out of the US. Today's price action has the US Dollar Index trading at its lowest level since April 2022 and on pace for its worst weekly decline since November 2022, as markets anticipate that July could mark the last Fed rate hike for this tightening cycle.

US producer prices increased by just 0.1% in June, falling below market expectations of a 0.2% rise. Services costs increased by 0.2%, driven by a rise in deposit services, while goods costs remained unchanged.

In addition, during the week ending July 8, initial jobless claims decreased by 12,000 to reach 237,000, well below market expectations of 250,000. Meanwhile, continuing claims slightly increased but remained close to a four-month low.

EUR

This morning, the Euro is higher and trading at a 15-month high, thanks to a fresh batch of European and US data crossing the wires.

Earlier today, France's latest inflation reading showed annual inflation decreased to 4.5% in June, driven by lower energy prices, which dropped by 3%. In addition, month-over-month CPI rose by 0.2%, while harmonized CPI showed a year-on-year increase of 5.3%, the lowest in over a year.

Furthermore, Eurozone industrial production rose by 0.2% compared to the previous month, driven by growth in capital goods and intermediate goods. However, on a yearly basis, there was a decline of 2.2% compared to the previous year.

GBP

The Pound continues to rally today after better-than-expected UK data, and a weaker Dollar has helped propel GBP/USD to its highest level since April 2022.

The UK economy contracted by 0.1% month-on-month in May, better than the expected 0.3% decline. The contraction was primarily driven by a decrease in industrial production, which fell by 0.6%. The most significant declines were in electricity, gas, steam, and air conditioning production. On a yearly basis, industrial production fell by 2.3%, which was in line with market expectations.

Meanwhile, the UK trade deficit reached its highest level since December, with a 2.6% decline in exports to an 11-month low and a 3.1% increase in imports. Exports to both EU and non-EU countries were negatively affected by reduced sales of fuel and chemicals. At the same time, imports from these regions grew due to increased purchases of machinery, transport equipment, and manufactured materials.

JPY

After an impressive five-day rally, the Yen is pulling back slightly this morning after the release of US PPI and jobs data. The Yen has been buoyed by rising market expectations that the Fed may end its tightening cycle after hiking one last time later this month, as well as recent rhetoric from Japanese officials hinting that they could intervene to backstop the Yen if needed to prevent rapid depreciation. There is also mounting speculation that the Bank of Japan (BoJ) may look at tweaking monetary policy after the recent inflation and wage growth prints out of Japan.

Looking ahead, Japan's latest industrial production numbers are set to be released overnight. May's monthly industrial output is expected to dip 1.6%, matching the April reading.

CAD

The Loonie is back in the green this morning, up around 0.2% after yesterday's Bank of Canada (BoC) decision, alongside the weaker US CPI print boosted the CAD to a two-week high.

As anticipated by the markets, the BoC increased its overnight rate target to 5% yesterday, following the surprise rate hike in the June meeting. With a revised forecast, the bank expects inflation to remain around 3% for 2024 before gradually slowing towards the target of 2% by mid-2025.

Meanwhile, WTI futures surged to a two-month high as softer-than-expected US inflation data sparked a risk-on rally that propped up commodity prices, benefiting the oil-linked Loonie.

MXN

The Peso is slightly lower on the day after gaining around 1% against the greenback yesterday, hitting its highest level since November 2015. In addition to benefiting from a weaker Dollar, the Peso received an additional boost from the recently released June Banxico meeting minutes, which indicate that rate cuts in Mexico are unlikely to be seen in the near future.

In the political arena, a recent poll revealed that Claudia Sheinbaum, the former mayor of Mexico City, holds a 10-percentage-point lead in voter preferences for the ruling party's candidacy in the upcoming 2024 presidential election. The ruling party, MORENA, enjoys a considerable advantage over the opposition, positioning their candidate as the frontrunner for the presidency.

BRL

The Brazilian Real is up again this morning after posting a 0.8% gain against the Dollar yesterday, leading Latin American currencies to a 10-year high as traders ditched the greenback in favor of risk assets.

Yesterday, Brazil's Industrial Entrepreneur Confidence Index reached an eight-month high of 51.1 in July, reflecting growing optimism in the industry driven by a more positive view of the current state of the economy as well as its future prospects.

Meanwhile, a recent survey by Genial/Quaest shows that financial market participants in Brazil are growing more optimistic about the country's economic future under President Lula. The poll highlights that 53% of respondents anticipate improvement in the next 12 months, and the approval rating for Finance Minister Fernando Haddad has also seen a significant increase.

CNY

After gaining over 0.6% against the Dollar yesterday, the Chinese Yuan is pulling back slightly this morning after disappointing trade data out of China was released overnight.

China's trade surplus narrowed more than expected in June as exports fell by 12.4% year-on-year, the sharpest decline since February 2020 due to weak global demand. Imports also declined by 6.8%, marking the fourth consecutive month of decreasing purchases, primarily driven by lower demand for unwrought copper and steel products.

However, demand increased for crude oil, natural gas, and iron ore commodities. Furthermore, the trade surplus with the US slightly widened, while exports to major trade partners, including the EU and ASEAN countries, decreased.