The US Dollar (USD) had a modest rally across the board on Monday but it was unclear why. It may have had something to do with month-end flows. However, the bigger story for FX markets is whether this broad, cross-market correction seen around 10/12 July has run its course, ING’s FX strategist Chris Turner notes.

Data driven movement under way

“Tomorrow's event risks will have a big say in that. Here, our team looks for a 15bp Bank of Japan rate hike, which could trigger more independent yen strength and extend the corrective environment. The second event risk tomorrow is the FOMC meeting, which we think will be risk-bullish and USD-negative as the FerFed prepares the market for a September rate hike.” 

“Today, the focus is on two US releases – both at 16CET. The job opening JOLTS data are expected to correct back to the eight million level after the unexpected spike to 8.14 million last month. Also in focus is July consumer confidence data, which is expected to dip lower. A softer confidence figure today will add to the view that the Fed will want to ‘sustain the expansion’ with a September rate cut.”

“DXY did well yesterday but could hand back those gains today were US data to emerge on the soft side or if the rest of Europe emulates France's seemingly strong second-quarter GDP data.”