The US Dollar (USD) is a little softer overall again this morning, reflecting a renewed strengthening in the bearish narrative amid investor concerns over the outlook for the US economy and monetary policy as well as the focus on the risk of political influence on Fed policy making and US data. Comments from a range of Fed officials since the NFP release have suggested that the report has adjusted their thinking somewhat, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret note.

USD marginally softer as markets focus on Fed, economy

"Cook and Kashkari are viewed as neutral voices among policymakers while Daly is considered dovish. It remains to be seen if the more hawkish viewpoints (a Williams or Schmid, for example) have adjusted at all. Markets are fully priced for a 25bps cut in the Fed funds target at the September FOMC and, with a total of just over 61bps of easing priced in for the balance of the year at the moment, swaps have started to price in the risk of somewhat more aggressive easing. Sweeping tariffs announced August 1 take effect today."

"The JPY is lagging amid reports that the 15% universal tariff has been stacked on existing tariffs. Japan thought it had an agreement to avoid stacking after trade talks with the US last month. European stocks have advanced on reports that a Trump/Putin meeting could take place shortly for Ukraine peace talks."

"The US releases weekly claims data at 8.30ET and Wholesale Inventories at 10ET. Fed Governor Bostic (non-voter this year) speaks at 10ET while the Treasury auctions USD25bn in 30Y bonds and a mammoth USD100bn in 4-week and USD85bn in 8-week bills. Recall that the 3Y and 10Y auctions earlier this week were mediocre, while yesterday’s late morning mini 'flash-crash' in US Treasury futures also drew attention. The Banxico policy decision at 15ET is expected to result in a 25bps cut in the Overnight Rate to 7.75%."