The top of the Eiffel Tower leans away from the sun, as the metal facing the sun heats up and expands.
It can move as much as 7 inches (18 centimeters) away from the sun.
The Week in Review
The euro area economy continues to outperform, bagging a week of solid fundamental data which has kept euro underpinned.
Canadian dollar is flirting with a two-year high against the USD after Canada’s economy expanded more than anticipated in May, compounding US dollar weakness after the same indicator missed estimates in the states.
Dollar selling is getting to be a fairly repetitive theme, but investors haven’t tired of it yet.
As expected, the Fed kept interest rates unchanged in their July meeting, but a few small changes in the accompanying statement were enough to sink the USD. As we thought, they softened their language on inflation. This was warranted given recent data. Inflation has hit below economist forecasts for four months running, and it remains well below the Fed’s two percent target. Members of the Federal Open Market Committee noted that both headline and core inflation had declined, and they would “carefully monitor” it.
The statement revealed that the committee is committed to unwinding its balance sheet “relatively soon” – something investors wanted to hear. Yet even a commitment to trimming the balance sheet couldn’t contend with the negativity on inflation. “Relatively soon” is fairly noncommittal, and while it’s drawn speculation that this will begin in the September meeting, they did not set it in stone.
USD could continue to underperform in the coming weeks and remains vulnerable to upcoming data – especially inflation.