The dollar was the butt of all jokes yesterday as it was whipped across the board. It yielded ground against both safe havens and comdolls as uncertainties in the U.S. economy continued to dampen demand for the Greenback. Has the dollar lost its safe haven status?
Although U.S. PPI came in above expectations at 0.2% (versus the 0.0% forecast), the dollar simply couldn’t find any buyers. While such a figure would normally alarm investors as it implies stronger inflation, details of the report reveal that the cost of crude goods, led by petroleum and food prices, dropped in July for the third straight month. As a matter of fact, this is one of the reasons why the Fed has more leeway to ease monetary policy further.
Lately, the dollar hasn’t been a popular choice for traders, which has led many to believe that it has lost its safe haven status. You’d expect it to be gaining ground with so much uncertainty surrounding the global economy, but that hasn’t been the case as of late. The U.S.'s domestic problems seem to be too much for even the dollar to handle.
In any case, the dollar will need solid readings from today’s reports if it wants to recover some of its recent losses. Luckily, there’s no shortage of reports to support it today!
At 12:30 pm GMT, the CPI report will be available. Forecasts call for a 0.2% rise to reverse the previous month’s 0.2% decline. At the same time, unemployment claims data will be published. Expect the number of claims to grow by 402,000, up from 395,000 last week.
Then at 2:00 pm GMT, the U.S. will roll out its most recent existing home sales data. Many expect the report to print a healthy rise from 4.77 million to 4.91 million. Meanwhile, the Philly Fed manufacturing index is anticipated to raise its reading from 3.2 to 4.0.
Forecasts for these reports show a bit of optimism for the economy. For the dollar’s sake, let’s hope they live up to their expectations. Good luck, kids!