Dollar dip might be temporary if US outlook remains robust

  • Walmart CEO is more optimistic about spending patterns  than he did 3 months ago
  • Dollar’s five-day rally halted as yen and yuan rebound
  • Fed could remain in hiking mode if economic resilience prevents inflation from coming down

Now that we heard from Walmart, it is clear that the US consumer is still willing to spend. Expectations for robust consumer spending in Q3 have been confirmed and that should keep growth estimates trending higher.  With COVID savings still expected to be used over the next couple of months and a lag with how student debt repayments go, confidence in continued business momentum should remain.  The Atlanta Fed’s estimate of 5.8% looks like it might actually happen, which should keep the Fed standing by its hawkish stance that they might need to do more tightening to combat inflation.

The US dollar is seeing some profit-taking as the yen and yuan, each respectively stage a rebound.  It might be hard for risk appetite to remain in place if  the bond market selloff continues.  With global bond yields to a 15-year high, that surely will feel like restrictive territory for the world.  China remains in focus and the decision from authorities to tell state-owned banks to step up intervention efforts is providing some support to markets. It is clear that China is working on their response here and that more support is on its way.


Walmart’s top and bottom earnings beats were accompanied with raised guidance, which made them have one of the top results from the retailers.  It seems that Walmart is taking away business from Target too, with grocery and ecommerce sales leading the way.  When the economy starts to cool in Q4, Walmart looks well positioned to be one of the top retailers. ​

FX Snapshot

​The Australian dollar declined after the unemployment rate rose more than expected. Labor market weakness should make the next RBA meeting easy as the economy is feeling the impacts of the RBA rate hiking cycle.  The RBA will hold rates steady for a third straight time at the September policy meeting.

The Chinese yuan rallied against the dollar after the PBOC asked state banks to intervene. The yuan was depreciating too quickly and authorities needed to boost sentiment. ​ ​ ​

Some traders are not expecting BOJ intervention until we see excessive weakness that takes dollar-yen possibly beyond the 150 level. ​ ​ We also need to hear Japan officials state they are watching exchange rates with great interest. Japan will likely need to step into markets, but until we see further yen downside, traders might eye further dollar short-term strength. ​ ​


After falling nearly six dollars, it was only a matter of time before crude prices found support.  WTI crude is rebounding on expectations that Chinese officials will deliver meaningful stimulus and that the oil market will remain tight. Earnings are also providing optimism that the US consumer is still strong and willing to spend and travel at the end of the year.

The dollar rally has stalled but if the bond market selloff falls to a new level, that could prevent commodities from rebounding further.  Oil looks like it will find a home around the $80 level as too many risks to the outlook still remain on the table; fears that the Fed will overtighten are back and uncertainty persists on how will the US consumer behave once all their COVID savings disappear and as student loan debt bills come due.


Gold prices are trying to recover after some hawkish Fed Minutes kickstarted a global bond market selloff.  Bond yields are too high as more people become convinced inflation is not going away anytime soon.  After making a 5-month low, spot gold has fallen below the $1900 level.  For the spot market the $1870 level remains major support, as the $1900 level with the gold’s future contract appears to have solid support.


It looks like some leveraged funds are ramping up bearish bets that Bitcoin will drift lower.  The US Commodity and Futures Trading Commission’s (CFTC) report on commitment of traders (COT) showed that as of August 8th, two-thirds are bearish, most likely a result of disappointment with the delays in seeing a Bitcoin US ETF approved.  When you throw in what is happening in the bond market, it becomes easy for Bitcoin prices to soften.  If risk aversion becomes the dominant theme on Wall Street, Bitcoin’s bearish momentum could target the $27,200 level.


Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.