The U.S. dollar drifted slightly lower again overnight and the Bloomberg Dollar Spot Index is in line for its fourth consecutive decline ahead of this morning’s inflation data.  The headline prints are pushing the dollar weaker this morning as price pressures have cooled further.  The so-called core consumer price index rose 2.0% on a yearly basis, below forecasts of 2.1%.  All of the readings were slightly softer than economist expectations and will likely increase the odds that the Federal Reserve will cut interest rates as soon as July. 

Trade news continues to dominate headlines.  Yesterday, U.S. President Trump said he is personally holding up a trade deal with China until the country agrees to terms that were negotiated earlier in 2019.  Proponents applaud the President for taking a hard line in negotiations but markets maybe not be as positive as the threat of continued or heightened tariffs weigh on risk sentiment.

EUR/USD remained in familiar ranges but it that did not stop leaders from both sides of the pond from tweeting about it.  Yesterday, U.S. President Trump argued that the euro is “devalued” against the U.S. dollar, making it harder for U.S. businesses to export.   Trump also took the opportunity to take a swipe at the Federal Reserve and recent interest rate hikes.  European Commission Vice President Dombrovskis pushed back against the notion the common currency is “devalued” and pointed out that the exchange rate is a product of “market forces.”   

The British pound rose modestly overnight to its strongest level in a week against the greenback.  If GBP/USD experience more swings, politics will be the likely culprit.  Former London Mayor Boris Johnson officially launched his campaign to become the next Prime Minister today.  Johnson is running on a promise to “Leave” the EU by October 31st, no matter what.  Johnson is the current favorite to win the position, causing alarm for some who worry a “No-Deal” Brexit might become a reality.

For their part, the Labour party is attempting make sure “Hard” Brexit is off the table.  The party is putting a vote before Parliament today that would set aside time at the end of the month for further debate.