The US dollar strengthened against major global currencies early Tuesday, as traders positioned themselves ahead of a wave of pivotal economic indicators set to be released throughout the day.
The rally in the greenback began ahead of the Redbook same-store sales update and is expected to gain further momentum depending on the outcome of several reports, including factory orders and job openings for April, as well as June’s preliminary consumer sentiment data.
Federal Reserve officials are also scheduled to deliver speeches on Tuesday. Chicago Fed President Austan Goolsbee, Fed Governor Lisa Cook, and Dallas Fed President Lorie Logan are all slated to speak, potentially offering more clues about future monetary policy.
This week’s macroeconomic calendar is packed, with jobless claims and the highly anticipated non-farm payrolls report due Friday. These data releases are likely to dictate the next significant move in the currency markets.
As of early Tuesday, the USD/EUR exchange rate had climbed to 1.1403 from 1.1445 at the close of Monday’s US trading session. Earlier in the day, it traded at 1.1419. This shift followed data showing that Eurozone consumer price inflation remained flat in May, while unemployment in the region dropped marginally in April.
All eyes are now on European Central Bank (ECB) President Christine Lagarde, who is expected to speak at noon US Eastern Time. The ECB’s next policy meeting is scheduled for Thursday, where a 25-basis point rate cut is widely anticipated.
In other trading activity, the British pound weakened against the dollar. GBP/USD declined to 1.3510 from 1.3547 at Monday’s close. No major UK economic data is scheduled for release Tuesday, with the Bank of England’s next rate decision set for June 19.
The dollar also gained ground against the Japanese yen. USD/JPY rose to 143.0657 from 142.6914. The pair was trading at 142.8175 on Monday morning. While Japan released no new economic data, Bank of Japan Governor Kazuo Ueda stated that rate hikes will not occur until economic fundamentals justify such a move. The BOJ’s next meeting is scheduled for June 16–17.
Against the Canadian dollar, the greenback advanced to 1.3735 from 1.3703 at Monday’s close. USD/CAD had traded at 1.3696 on Monday morning. With no Canadian economic reports scheduled for Tuesday, attention turns to Wednesday’s Bank of Canada meeting, where analysts expect no change in the current policy stance.
