The U.S. Dollar lost momentum following yesterday’s reaction to President Donald Trump’s dovish commentary on the Fed.
On a CNBC interview, the POTUS said that he would let the Fed decide best, but that he was “not thrilled” with hikes in interest rates. He also sounded confident in the economy, but his statements caused the greenback to lose all its gains from economic performance Thursday morning.
At the time of writing, the buck continued to sink further as a result of a tweet from the President accusing China and the European Union of manipulating their currencies. Perhaps the escalation in trade tensions and now currency war potential is a dollar-negative factor for the short-term. Another tweet just followed in which Mr. Trump questioned why the Fed would be raising rates when debt is coming due. The Dollar is now headed towards losing all its weekly gains thus far.
The Euro is climbing despite some turbulence news-wise in politically and regarding Brexit. In Italy, some turmoil was reported between leaders of the current coalition governing the country. The Treasury Secretary Giovanni Tria was also said to be resigning, but this has been denied by government officials.
Additionally, a report by the International Monetary Fund (IMF) explained that the EU could be set to lose 1.5% of its GDP annual growth if a Brexit deal is not reached. The lack of clarity and the in-fighting within U.K. officials dampens prospects of growth across the entire continent if no solution is reached by year’s end.
The Canadian Dollar picked up some steam this morning after some indicators improved higher than expected. Retail Sales for the month of May grew by 2.0%, double the estimated 1.0%. More importantly, CPI grew when it was not expected to an increased the annual average to 2.5% from 2.3%.
This changes the dynamics for the “loonie” and its economic picture since the first half of the year witnessed a major tumble with slow start to the economy. Currently, the CAD is up by over 1.1% from yesterday.