Daily Market Update

Dollar Unchanged Overnight; Near Multi-Month Highs v. Majors

June 20, 2018

Global equities are seeing a modest rebound today after steep declines yesterday on increased trade tensions between the United States and China.

Overview

The U.S. dollar was a beneficiary of yesterday’s risk-off move and is holding most of its gains today even as stocks attempt to rebound. Indeed, the Bloomberg Dollar Spot Index gained 0.05%.

Following last week’s busy central bank schedule, there are many policy makers set to make speeches today that will garner our attention. ECB Head Draghi, Reserve Bank of Australia Governor Lowe, Bank of Japan Governor Kuroda and Fed Chairman Powell will all be on a panel on central bank policy in Sintra, Portugal later today.

The domestic economic docket remains light with only existing home sales set for release at 10 a.m. More second tier data, including weekly jobless claims and the Philly Fed, will cross the wires but are unlikely to have a large impact the direction of the greenback.

 

EUR

EUR/USD opens this morning in familiar ranges from yesterday; however, the pair experienced some “whiplash” overnight. The Euro briefly shot higher after a letter from Bank of France Governor said the first ECB interest rate hike “would come as of the summer of 2019.” However, the common currency quickly dropped to an overnight low after Governing Council member Ewald Nowotny acknowledge what we have been saying for months: monetary policy divergence is helping to weaken the currency against the dollar.

 

GBP

The British pound remains near a seven-month low versus the U.S. dollar despite a minor up-tick overnight. UK CPI Manufacturing Orders survey showed a decent rebound in volume of orders in June, but traders continue to focus on Brexit worries instead of the supportive data. Prime Minister May faces another vote in parliament today, this time in the House of Commons. The debate is over whether May will have the sole power to “divorce” the EU or whether parliament will get a say (vote) on the process.

 

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