Daily Market Update

Dollar Gains for Second Day

June 27, 2018

The U.S. dollar is gaining for a second day against most of its counterparts, reversing declines from Monday and the second half of last week.

USD

Global equities are ticking higher this morning on reports that President Trump is softening his stance on Chinese investments. Markets have been wary that the White House would invoke a little-used law reserved for economic emergencies to penalize China.

The greenback is extending its gains modestly in early trading despite weak Durable Goods Orders. Orders placed with factories for business equipment fell 0.6%, beating a disappointing expectation of a -1.0% contraction. The core reading also missed estimates. However, April’s readings were upwardly revised showed an overall “wash”.

Friday’s personal income and spending remain as the most important economic data of the week. Economists expect that personal spending probably increased fin May for a third month.

 

EUR

The Euro is down for a second straight day against the U.S. dollar and is now within 0.5% of its weakest level in 11 months. French consumer confidence slipped to 97 in June, down from May’s reading of 99. Italian consumer confidence rose slightly but manufacturing confidence data weakened amidst political uncertainty in Europe’s third largest economy.

The Euro is down for a second straight day against the U.S. dollar and is now within 0.5% of its weakest level in 11 months. French consumer confidence slipped to 97 in June, down from May’s reading of 99. Italian consumer confidence rose slightly but manufacturing confidence data weakened amidst political uncertainty in Europe’s third largest economy.

 

GBP

The British pound’s negative momentum continued overnight. The sterling’s recent decline began yesterday morning after incoming Monetary Policy Committee member Jonathan Haskel held what is being considered a “dovish” position towards future interest rate hikes.

Fairly positive economic data was unable to salvage the sterling. U.K house prices rose modestly in June according to the Nationwide survey. However, the yearly numbers show prices continue to be mostly soft.

The main driver of GBP/USD over the summer will be future interest rate expectations. Currently the OIS is pricing in a 68% chance of a quarter point hike in August.

 

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