The U.S. Dollar gained ground overnight as a result of less enthusiasm over Euro prospects and political havoc in the United Kingdom.
Commodities and equities also flourished, establishing a positive correlation between risk-appetite and greenback appreciation. It seems that recent corporate gains are fueling global growth, although not everything looks rosy on the horizon. For now, trading issues are not inflicting pain on FX or stock indicators, however, retaliation is feared.
Job Openings will be out this morning at 10AM, but we are awaiting Consumer Price Index on Thursday to have more of an impact as a piece of important data. As long as markets keep rising, the dollar may follow. Already the Japanese Yen is feeling the effects as it dropped to its weakest level in six months.
The Japanese Yen has tumbled recently and it is finally down to its worst point in six months. Scandal following Prime Minister Shinzo Abe, anemic inflationary and contractionary GDP growth, and the lack of risk-aversion has caused the third most traded currency to fall dramatically in the first half of 2018. We foresee a bit of a return to levels from earlier this year since trade worries may cause problems to commodity as well as stock indexes if we close the year with more barriers to trade.
The Pound has stayed in tight ranges surprisingly after a tumultuous Monday which witnessed the resignation of two key members of Prime Minister Theresa May’s cabinet. British media has focused on forecasting if May will face a no-confidence vote, but today may bring other concerns as she tried reaching out to lawmakers in the Labour Party
With Conservatives split, May will likely survive if she builds a moderate coalition around the idea of a “soft” Brexit with a future in which EU rules and commitments stay put for a comfortable while. Otherwise, big changes to the administration may come and the negotiations could change.