Week Ahead: Stable Unemployment + Firm CPI = USD Recovery?

Summary

• Last week, the US dollar fell to new lows for the year against half the G10 currencies, including sterling, the Norwegian krone, and Canadian, Australian, and New Zealand dollars.
• After cutting its policy rates by 200 bp beginning in June 2024, the ECB is likely to pause and wait for the cumulative effect of the easing to catch up to it.
• The yen's exchange rate continues to reflect the dollar's broad movement rather than interest rates, as is often the case.
• The movement of the Canadian dollar seems more sensitive to the general direction of the US dollar than interest rates, S&P 500 (risk), and oil.

Galeanu Mihai/iStock via Getty Images

Last week, the US dollar fell to new lows for the year against half the G10 currencies, including sterling, the Norwegian krone, and Canadian, Australian, and New Zealand dollars. A key question is whether it is a breakout and a signal