USD

The Dollar Index is rallying this morning and trading at its highest level since June 8, following disappointing Eurozone and UK PMI releases earlier today.

On the home front, US mortgage applications have dropped for the fifth consecutive week as of last week, with both refinancing and home buying applications falling. Meanwhile, the average 30-year fixed-rate mortgage rate has risen to 7.31%, the highest level since December 2000.

At 9:45 AM EST, S&P Global US PMIs are on deck, with the manufacturing PMI expected to slightly improve to 49.3 in August. However, this would still indicate contraction in the sector for the ninth month out of the past ten. On the other hand, the service sector is projected to remain steady and show growth for the seventh straight month.

EUR

The Euro is tumbling today following concerning private sector data from across the Eurozone, pushing EUR/USD to its lowest level since mid-June.

The Eurozone Composite PMI has fallen to 47.0 in August, marking the lowest reading since November 2020 and missing market expectations. This contraction has been driven by a sharp decline in manufacturing output and a surprising slowdown in services – the first such slowdown since December 2022.

Similarly, both Germany and France have experienced severe contractions in their private sectors, with Germany's Composite PMI sinking to 44.7 and France's dropping to 46.6. Both figures are significantly below expectations, pointing to a troubling outlook for Europe's largest economies.

GBP

The British Pound is sinking this morning amid a selloff triggered by the dismal UK PMI report earlier today. As of this morning, GBP/USD is testing a two-month low and is on track for its worst single-day performance since July 27.

The S&P Global/CIPS UK PMI has fallen to 47.9 in August, the lowest reading since January 2021. Slowdowns in new business, work backlogs, and job growth have led to sharp declines in both the services and manufacturing sectors. The manufacturing PMI has dropped to 42.5, its worst level since the early days of the pandemic, marking 13 months of decline. Meanwhile, the services PMI has contracted to 48.7, signifying the first contraction since January.

JPY

The Japanese Yen is gaining ground for the second consecutive day as traders digest Japan's latest private sector data.

The au Jibun Bank Japan Composite PMI has increased to 52.6, marking the eighth consecutive month of private sector expansion led by the service sector. Japan's services PMI reached a three-month high of 54.3 in August, supported by new orders and international business growth, despite rising input costs and declining business sentiment. On the other hand, the manufacturing PMI improved slightly to 49.7 but still indicated sector contraction for the third consecutive month, with input costs increasing and sentiment weakening.

CAD

Following the latest Canadian retail sales report earlier this morning, the Loonie is down by over 0.15% on the day as it aims to avoid its eighth consecutive daily loss.

Canadian retail sales increased slightly by 0.1% in June, with the automotive sector, particularly new car dealers, driving the growth. However, core retail sales, which exclude autos and fuel vendors, declined by 0.8% month-on-month, falling far short of the expected 0.3% gain. This decline was primarily due to decreased sales at general merchandise retailers and food and beverage retailers. Meanwhile, the preliminary estimate for July suggests a 0.4% increase, which would be its strongest reading since April.

MXN

The Mexican Peso is holding onto modest gains this morning, despite the overall strength of the Greenback today, as MXN aims to extend its daily winning streak to six.

Tomorrow morning, Mexico's mid-month inflation reading for August is scheduled for release at 8:00 AM EST. Market expectations are for inflation to have risen by 0.28% on a monthly basis, in line with the July figure. On an annual basis, inflation is anticipated to come in at 4.67%, marking the lowest level since March 2021. Lastly, core inflation is projected to cool to 0.21% month-on-month and 6.23% annually.

BRL

After gaining nearly 0.9% yesterday, marking its best performance since August 4, the Brazilian Real is edging higher again this morning against the Dollar.

Yesterday, Brazil's President Lula da Silva voiced his support for additional countries to join the BRICS bloc, emphasizing the goal of organizing the group rather than challenging the G7 or G20. Lula also proposed a common trading currency for member nations to facilitate trade without replacing national currencies or the US dollar.

Additionally, crossing the wires yesterday, Brazil's federal tax revenue dropped by 4.2% year-on-year in June, missing market expectations. This drop was primarily due to a 30% reduction in corporate income tax, a result of tax law changes.

CNY

The Chinese Yuan is slightly higher this morning against the Greenback, despite the US Dollar rally, as the PBOC continues to aggressively adjust its onshore fixes to support the CNY.

Meanwhile, the property sector in China remains quiet, and the absence of news is being interpreted as positive for the Yuan. Investors worldwide are eager to understand the extent of issues among some of its key property developers and how Chinese authorities plan to bolster the sector to prevent a major crisis that could impact global markets.