Global Themes

USD

The week is off to a solid start for America’s housing market, reassuring news that buoyed the dollar. A day after homebuilder confidence notched decade highs, housing starts increased at the fastest rate in nearly eight years. A gauge of future groundbreaking, building permits, fell, which followed three months of big gains. The data kept a Fed rate hike as soon as September on the radar, a dollar positive timeframe.

GBP

Markets rewarded the pound with a pop to its highest in nearly seven weeks after a surprise uptick in U.K. inflation bolstered views that Britain was among a sparse global community contemplating higher interest rates. Still, inflation held around zero for the sixth time in as many months, suggesting the support the pound received today may not have legs. Inflation has a long way to go to reach Britain’s 2% target. U.K. retail sales Thursday are expected to rebound with a 0.4% gain in July after falling in June.

CAD

Oil’s fall closer to $40 has strengthened headwinds on Canada’s resource-driven economy which has weighed on the loonie. Canada’s currency weakened to within a penny of recent decade-plus lows. Friday looms large for Canada’s dollar when big ticket data on consumer inflation and retail sales come due.

EUR

A reduction in worries about China resulted in a reduction in support for the euro which has drifted lower in recent days. At the height of China’s tumult last week, the euro was flying at one-month highs as risk-averse markets scurried to buy back the euro and sell China’s currency, the yuan. China isn’t out of the woods which should keep the euro on a volatile footing. The euro stands to lose when calmer markets focus on U.S. fundamentals and the Fed, which some see as being less than a month away from its first rate hike in nearly a decade.

AUD

A China stock swoon of more than 6% Tuesday weighed on the already vulnerable Aussie dollar. The Aussie kept close to six-year lows as uncertainty about China kept a dark cloud over Australia’s economy. Aussie buyers should consider locking in profits as minutes from Australia’s last central bank meeting refrained from calling for further falls in the Aussie, a departure from recent months, suggesting the currency may be near a bottom.