The U.S. dollar is slightly on the back foot this morning but is overall near the strongest level of recent ranges after a significant rally during yesterday’s session.
The dollar’s rally started in the morning after the White House decided not to press forward with new restrictions on Chinese investments based on national security concerns. Nevertheless, U.S. stocks closed lower again.
The New Zealand dollar fell to its lowest level in two years after the central bank signaled it was prepared to cut interest rates on slowing economic growth.
Emerging market currencies continue to slump. The Indian Rupee has fallen to its weakest level on record and the Chinese yuan touched its lowest level since November.
This morning’s economic docket is putting a bit of pressure on the dollar. GDP was revised down to 2.0% compared to the second estimate of 2.2%. Personal consumption also barely missed estimates. Tomorrow will see the release of the much-anticipated personal income and spending report.
After falling nearly a percent during yesterday’s session, the Euro was able to stop the bleeding somewhat overnight. The Euro benefited slightly from decent German regional data and stronger than expected Italian inflation, however this is unlikely to change the overall course of the currency.
Geopolitics within Europe will play a big role in today’s trading as the European Council starts a two day meeting in Brussels. Traders will be keeping an eye on developments over how leaders plan to deal with the migration of refugees. German Chancellor Angela Merkel will be looking to make a deal with other leaders over border controls as political pressure mounts against her and her newly formed coalition government.
Unlike some of its European rivals, the British pound was unable to find a bottom against the U.S. dollar. The sterling is now at a 8-month low versus the greenback. Market participants have been so bearish against the sterling, they seem content on pushing the currency lower on no news. There was no economic fundamental released today.
With immigration and security likely to fill the European Council’s docket, Brexit may take a backseat despite the deadline only being nine months away.