USD

After dropping by about 0.1% yesterday, the US Dollar Index is down another 0.3% this morning after the release of multiple US economic data points earlier.

New orders for US durable goods in May exceeded expectations, with a sharp 1.7% month-over-month increase, driven by a sharp increase in transportation equipment and demand for capital goods. However, there were declines in orders for defense-related items and fabricated metal products.

In addition, the US April Housing Price Index showed prices rose 0.7% month-over-month, beating expectations of a 0.3% rise after posting a 0.5% increase in March.

Later this morning, US consumer confidence and new home sales are set for release at 10:00 AM EST.

EUR

The euro is up by more than 0.5% this morning as traders digest more hawkish rhetoric from the ECB at their Forum on Central Banking.

ECB President Christine Lagarde and other policymakers have maintained a hawkish stance, insisting that interest rates should remain at restrictive levels for an extended period. Lagarde even hinted at the potential for higher interest rates than currently projected to combat Europe's inflation problem.

Additionally, ECB policymaker Gediminas Simkus emphasized the importance of maintaining restrictive rates to achieve the targeted 2% inflation and firmly ruled out the possibility of rate cuts in 2024.

GBP

The pound is up by about 0.2% today after yesterday's volatile session saw GBP barely close in the green.

Despite the recent decline from the recent highs seen last week, the pound is on pace for its best first-half performance in six years as the mid-way mark of 2023 approaches.

According to reports, the UK government is considering not implementing the recommended public sector wage increases to avoid exacerbating inflationary pressures. This decision raises the possibility of public sector strikes, while Chancellor Jeremy Hunt has also reversed proposed tax cuts due to inflationary risks and the potential for increased demand and consumption.

JPY

The yen is trading sideways ahead of the US session after briefly testing the seven-month low earlier as traders continue to gauge the probability of Japanese officials stepping in to stop the JPY from further weakening.

Japanese authorities have increasingly been vocal recently, with the latest comments from Japan's Finance Minister, Shunichi Suzuki, reiterating that they are watching the exchange rate closely and "will take action if the moves become excessive."

JPY traders will have their eyes on tomorrow morning's scheduled comments from BoJ Governor Kazuo Ueda to see if he will provide any insight into the yen's struggles or how the Bank may react.

CAD

The loonie is down slightly this morning after the release of Canadian CPI for May and US durable goods data.

Canada's annual inflation rate decreased to 3.4% in May, the lowest since June 2021, mainly influenced by lower energy prices and eased supply chain bottlenecks. Mortgage costs, however, increased significantly due to higher interest rates.

The outcome aligns with the Bank of Canada's projection of inflation slowing to 3% by summer, reducing expectations for the number of rate hikes left by the BoC this year.

After the release, market pricing indicates a 60% chance of a 0.25% BoC hike in July.

MXN

The Mexican peso is up again today after yesterday's 0.2% gain against the US dollar, keeping MXN close to the April 2016 highs.

Earlier this morning, Mexico's trade balance was surprisingly good, posting a deficit of just $0.074 billion in May against an expected $1.1 billion deficit. The result was driven primarily by a drop in energy prices and limited import costs.

In addition, foreign purchases increased by 1.4%, with imports of petroleum-based goods declining notably and exports rising by 5.8%.

BRL

The Brazilian real is rising slightly again this morning, building on yesterday's gain of 0.4% against the dollar and pushing BRL toward the levels seen in May 2022.

BRL traders got a fresh look at Brazil's inflation situation today, with June mid-month inflation coming in at just 0.04%. While market expectations were for a decline of 0.01%, the result was much better than the previous read of 0.5%. While this is just one data point, today's release will likely fuel expectations for a 0.25% rate cut in August from Brazil's Central Bank. Markets will get a second look at Brazilian inflation this Thursday, with wholesale prices set for release.

CNY

The yuan is up by about 0.4% today as traders weigh the prospect of further intervention from the PBoC to keep the currency afloat. Despite the rally, CNY remains near its lowest level in seven months.

The PBoC has taken another step to address the CNY depreciation, breaking with expectations by setting a stronger daily fixing rate in the onshore market for the second straight day.

However, despite the intervention, markets appear wary that such moves would only provide a temporary boost for the yuan unless it is paired with the appropriate level of fiscal stimulus to support China's economy.