Dollar Stays Weak, but Equities Rebound Following Friday’s Selloff – Currency Thoughts
Dollar Stays Weak, but Equities Rebound Following Friday’s Selloff
August 4, 2025
(180) Dollar losses last week were extended this Monday by 0.4% against the Mexican peso and Korean won, 0.2% versus the yen and sterling and 0.1% compared to the Canadian dollar. The euro is steady, and the Swiss franc has risen 0.5%.
All four broad U.S. stock market indices — the DOW, SPX, Nasdaq and Russell 2000 — have bounced up at least 1.0% so far on bottom-fishing and in response to the stream of quarterly earnings reports. European equities have done about as well, but Asia saw mixed results, with markets in Japan and Indonesia closing down 1.3% and 1.0% but higher closes in Hong Kong (0.9%), South Korea (also 0.9%), Singapore (+1.0%) and China (+0.7%).
Gold and Bitcoin prices are each 1.0% stronger. In contrast, the price of WTI oil (-2.3%) declined after the OPEC cartel confirmed a production hike of 547 million bpd back to levels before a cut in 2023.
Ten-year sovereign debt yields have fallen this Monday by seven basis points in Italy, six bps in France, five bps in Germany and Spain, four bps in Japan and two bps in Great Britain. The 10-year U.S. Treasury yield is two basis points firmer, however, reflecting continuing concern over the coming inflationary impact of big tariff hikes that become effective this Thursday. There is a strong feeling that the shocking U.S. jobs data and firing of the BLS chief will now elicit an interest rate reduction by the Federal Reserve next month.
Canadians are observing a national civic holiday today.
In addition to the aforementioned imposition of fresh tariff hikes, the coming week’s menu of events and data releases includes service and construction sector purchasing manager indices, Japanese and Chinese current accounts, German orders, industrial production and trade figures, U.S. trade and productivity figures, and monetary policy decisions in the U.K., Serbia, Armenia, India, Mexico, Moldova, and the minutes of recent policy reviews by the Bank of Japan and European Central Bank.
Among data reported today, Turkish consumer price inflation fell in July to a 44-month low of 33.5%. That was a tad below expectations and down from 75.45% in May 2024 and 85.5% in October 2022. Turkish producer price inflation of 24.2% was at a 2-month low, having crested in October 2022 at 157.7%.
Near the other end of the global inflationary spectrum, Swiss consumer prices held steady in July but ticked up 0.1 percentage point in year-on-year terms to 0.2% last month. Swiss core inflation of 0.8% climbed to a 4-month high but was only a third as much as the 2.4% high in 2023.
Switzerland faces a 39% U.S. import tariff, and its manufacturing sector purchasing managers index has been under the 50 threshold separating positive growth from contraction since the start of 2023. July’s reading was 0.8 points below June’s at 48.8.
The Sentix gauge of investor confidence in Euroland’s economy relapsed unexpectedly to a 3-month low of -3.7 from a previous reading a month ago of -3.7.
Mexican consumer confidence, which sank as low as 31.1 in the early days of the Covid pandemic and which has ranged between 40.9 and 49.2 since mid 2022, ticked up 0.4 points in July to a 2-month high of 45.9.
Georgian consumer price inflation rose to a 28-month high of 4.3% in July. It previously had decelerated from 13.9% in January 2022 to 0.1% by November 2023.
U.S. manufacturing orders posted their largest monthly drop (-4.8%) in June since the early days of Covid but still managed to post a 3.8% advance in the first half of 2025 compared to a year earlier. Durable goods orders rose 7.9% in the first half, while orders for non-durable items edged down 0.1%.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Swiss and Turkish CPI, U.S. factory orders
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