USD

After a dismal two-week stretch that saw the Dollar Index shed nearly 3%, the Greenback looks poised for a strong rebound, up over 1% on the week heading into the final session. 

The latest leg of the rally was driven by an unexpected decline in initial jobless claims yesterday that gave Dollar bulls hope that next week won't be the last Fed rate hike of 2023. A 0.25% hike for next Wednesday's Fed decision is fully priced in, while bets on an additional hike in September are slowly ticking back up.

While it is quiet on the US calendar today, there is plenty of action on deck for next week, beginning with Monday's PMI data, followed by the highly anticipated Fed interest-rate decision on Wednesday, Q2 GDP on Thursday, and finally PCE on Friday.

EUR

The Euro is on pace for its worst weekly performance since May, ending a three-week winning streak against the Dollar, although it is mostly unchanged on the day as Wall Street checks in.

With no European economic data on the docket today, Euro traders will shift their focus to next week's loaded calendar featuring interest rate decisions from the Fed and ECB, with both central banks expected to raise rates by 0.25%. Regarding the ECB, markets are also pricing in an additional 0.25% by the end of the year. They will be keen to analyze the Bank's monetary policy statement that accompanies the decision in search of clues as to when the next hike could come.

GBP

Sterling is back in the red today as its dismal week continues. GBP/USD is now down around 2% on the week and on track for its steepest single-week loss since January despite this morning's retail sales beat in the UK.

UK retail sales grew by 0.7% in June, the third consecutive month of growth, driven by summer sales and favorable weather. The result surprised markets, given the consensus forecast for a 0.2% increase. However, on an annual basis, sales declined by 1%.

Meanwhile, consumer confidence in the UK fell for the first time in six months as rising prices and higher interest rates continued to pressure the UK consumer.

JPY

The Japanese Yen continues to tumble today after the release of softer-than-expected inflation data and another dose of dovish rhetoric from the BoJ sent the currency plummeting over 0.8% on the day. With the decline, the Yen is well on its way to its worst weekly performance since February – wiping out most of last week's gains in the process.

Japan's annual inflation rate rose slightly to 3.3% in June, below market expectations of 3.5%. Despite declines in fuel and utility prices, food and other household items continued to rise, causing core inflation to rise to 3.3%. In addition, monthly CPI rose 0.2%.

Finally, a recent Reuters report noted the BoJ is expected to keep its key yield control policy unchanged after its upcoming monetary policy meeting next week – putting further pressure on the Yen.

CAD

The Loonie is on the back foot this morning as traders assess Canada's latest retail sales figures. 

Canadian retail sales are projected to have flatlined in June after a posting 0.2% increase in May, with motor vehicles and food retailers performing well, but general merchandise and healthcare retailers saw a decline. In addition, annual sales rose by 0.5%, the slowest increase since Q2 2020.

Turning to the housing market, new home prices in Canada remained unchanged at 0.1% in June, slightly above forecasts. Prices increased in some areas due to improved market conditions and construction costs, but annualized prices fell by 0.7% as rising interest rates continued to sap demand.

MXN

The Mexican Peso is declining again this morning, although rebounding off the lows, as the stronger Dollar and yesterday's disappointing retail sales data out of Mexico weigh on the currency. As the North American session kicks off, the Peso is staring at the prospect of its most significant weekly drop since March.

Next on the calendar for MXN traders is July's mid-month inflation data scheduled for release Monday at 8:00 AM EST. On an annual basis, the June headline figure fell to 5.18%, its lowest level since March 2021, keeping with the declining trend seen in the index since September 2022.

BRL

The Brazilian Real is moving higher this morning and entering the final session up 0.1% against the Dollar on the week. Given the quiet stretch on the Brazilian economic calendar this week, BRL traders will be eager to turn the page to next week with some critical data and reports on the docket.

Next week begins with the latest BCB Focus Market Report, where the central bank will provide fresh market forecasts on inflation, interest rates, and other key economic indicators for Brazil. The rest of the week will include multiple looks at Brazil's consumer inflation, producer prices, consumer sentiment, and unemployment data.

CNY

After yesterday's 0.84% rally versus the Dollar, the Chinese Yuan is stepping back this morning and heading towards its first losing week of the month. Despite the PBoC's latest higher-than-expected fixing, the broad demand for Dollars is proving too challenging for the Yuan today.

Meanwhile, Chinese authorities revealed new efforts to increase automobile and electronics sales to support the slowing economy. Measures include increasing car purchase quotas, supporting sales of second-hand vehicles, and encouraging the application of domestic AI technology in electronics.  

While it is a start, markets remain focused on the next annual Politburo meeting, likely to take place this month, for a more comprehensive fiscal stimulus package to be unveiled.