The USD rose 0.2% yesterday, reaching nearly two-week highs amid hedging flows ahead of U.S. tech earnings. Deteriorating risk sentiment following disappointing earnings results late yesterday has caused USD/JPY to decline overnight to levels last seen on May 16th. Investors are also increasing expectations that the Bank of Japan will raise interest rates at its July 31st policy meeting. Risk-sensitive currencies like AUD and NZD are leading G10 losses today. The USD is trading slightly lower this morning. President Biden is scheduled to deliver a speech today about his withdrawal from the presidential race.

EUR/USD fell 0.35% yesterday and is marginally higher today, trading about 0.9% lower than this time last week. Eurozone aggregate manufacturing and services PMI data missed expectations, and Germany’s composite PMI reading was particularly weak, unexpectedly declining into contraction territory. The EUR was down as much as 0.25% at the time of the PMI data releases before USD weakness reversed the pair’s direction this morning.

GBP/USD lost 0.2% yesterday but has gained 0.2% back this morning, trading roughly 0.7% lower than this time last week. PMI data showed a beat in the manufacturing sector (a two-year high), while the services reading slightly missed expectations, leading to a slight beat in the composite PMI metric. Both manufacturing and services PMIs are firmly in growth territory and increased from their respective prior readings, while prices charged were seen moderating.

USD/CAD rose 0.2% yesterday, its fifth straight daily advance. The Bank of Canada cut rates 25 basis points this morning, signaling more cuts ahead as below-potential growth continues to moderate price pressures. "With the target in sight and more excess supply in the economy, the downside risks are taking on increased weight in our monetary policy deliberations," the statement read. Weaker-than-expected household consumption and signs of slack in the labor market were noted as tilting the balance of risks to the downside. USD/CAD has had a fairly muted reaction since the decision, up just 0.1% to levels last seen on April 19th. A cut at the September meeting remains priced in at the 60% level post-decision as implied by swap odds.