USD

The US Dollar Index begins the week positively and aims to achieve five consecutive winning sessions ahead of the release of US PMIs later this morning.

Market forecasts point to a slight decline in the composite PMI for July, led by an anticipated drop in the services PMI to 54 from the 54.4 level seen in June. Meanwhile, the manufacturing PMI is projected to tick up to 46.4 but remains well in contraction territory.

Today's PMIs will be the final major US data release before the Fed's next interest rate decision on Wednesday, where another 0.25% rate hike is expected to be announced.

EUR

The Euro is again on the back foot this morning following last week's 0.9% decline against the Dollar. 

Disappointing PMIs across the Eurozone have fueled today's losses, sparking fears of worsening conditions across major European economies.

The Eurozone Composite PMI is expected to tumble to 48.9 this month, reflecting a sharp drop in business output, with declining new business inflows and backlogs of work. Employment growth was also concerning, slowing to February 2021.  

Looking at Europe's biggest economy, Germany's Composite PMI dipped to 48.3, witnessing the first contraction this year, primarily due to a rapid decline in manufacturing production. Meanwhile, France's Composite PMI plummeted to 46.6, the most extensive contraction since November 2020.

GBP

After a dismal week that saw it lose over 1.8% against the Dollar, the British Pound is down again today after UK PMI numbers missed the mark earlier this morning. The UK's private sector growth cooled in July, with the preliminary composite PMI coming in at 50.7 thanks to the worst manufacturing sector decline in over three years and a slowdown in service sector growth.

The UK's stubborn inflation and higher interest rates have weighed heavily on the private sector. With business activity expectations falling to a seven-month low, survey participants have little confidence in the situation improving for Q3.

JPY

The Yen is back in the green this morning following last week's rough ride that saw the currency drop nearly 2.3% versus the Greenback. Last week's selloff was fueled by soft inflation data from Japan and reports indicating the BoJ would not adjust its yield-curve control measures at their upcoming meeting this week. 

Meanwhile, Japan's private sector growth slowed in July, led by a sixth-consecutive month of manufacturing sector contraction. The declines in manufacturing were fueled by new orders falling to their lowest level since March. That said, Japan's services sector remained resilient, with the services PMI coming in at 53.9, expanding for the seventh-consecutive month.

CAD

The Loonie is up around 0.2% against the Dollar this morning after closing slightly in the red last week, failing to hold on to its gains from earlier in the week. Today's rebound, helped partly by oil prices rising to a three-month high, has helped the Loonie claw back about half of its losses from Friday that were driven by disappointing Canadian retail sales figures.

Earlier this morning, Canadian wholesale sales fell 4.4% in June, marking its worst monthly decline since the pandemic, with sales contracting across all subsectors. CAD traders will now shift their focus to Canadian manufacturing sales, which are on deck for tomorrow morning.

MXN

Following a nearly 1.5% drop in the previous week, The Mexican Peso is rallying this morning, up 0.7% versus the Greenback after getting a boost from this morning's inflation release out of Mexico as well as rising oil prices.  

Headline inflation fell on an annual basis to 4.79%, down from 5.18% in the previous read. However, monthly inflation did rise 0.27% - the highest increase since February. Meanwhile, core inflation slowed to 6.76% year-on-year compared to last month's 6.91% read while rising to 0.24% from 0.11% on a monthly basis.

Next on the calendar is Mexico's latest economic activity index, set for release tomorrow morning.

BRL

The Brazilian Real opens the week higher against the Dollar today, rallying 0.5% heading into the North American session and retesting a 13-month high.

As BRL traders await the latest Focus Market Readout from the BCB to be released this morning, they will also look ahead to tomorrow morning's mid-month inflation read out of Brazil. Consensus estimates suggest month-on-month CPI will come in flat after posting a modest 0.04% increase in the previous read. Furthermore, the annualized figure is anticipated to cool to 3.26% from the previous 3.4%. If these projections come to fruition, it could add to speculation that the BCB may be ready to cut rates in August.

CNY

The Yuan is on the decline again today, although bouncing off the lows from earlier this morning, as traders jockey for position ahead of this week's expected Politburo meeting in China. CNY traders are looking for a comprehensive fiscal stimulus package from the Chinese government to help reverse the course of the ailing Chinese economy.

Meanwhile, the PBoC continues to set its onshore fixing rate well above market expectations to support the Yuan, which may be bracing for additional selling pressure as month-end looms.

On the data front, the calendar is quiet for the most part this week, aside from Wednesday evening's industrial profits release out of China.