The U.S. dollar was under broad pressure yesterday as global stocks rose on news that the United States and Mexico made headway towards reaching a trade deal.
The hope is that now Canada will join the negotiations and diffuse some of the trade tensions in North America. However, not all the news on the trade front was warm and fuzzy. President Trump said that “it is not the right time” for trade negotiations with China, pouring cold water on hopes the world’s two largest economies could come to an agreement.
The Bloomberg Dollar Spot Index is headed for its eighth drop in nine days and there is not much in the way of fundamental data to save the greenback today. The Conference Board’s consumer confidence will cross the wire at 10 a.m. A revision of second quarter GDP is set for release tomorrow and is the biggest fundamental risk event on the docket.
The Euro popped to its strongest level since the beginning of August. EUR/USD continued its positive momentum from yesterday’s trading that saw strong German business sentiment combined with a willingness to sell dollars on trade hopes. There is no major data slated for release in the Eurozone today so expect the Euro to test new, higher ranges as traders reposition for the end of the month.
The British pound took advantage of general dollar weakness and gained minor ground overnight. However, the sterling fell to a fresh yearly low against the Euro. Prime Minister Theresa May flamed the fire of a no Brexit deal possibility overnight. She said that “no deal is better than a bad deal,” causing traders to unwind more sterling positions. The U.K. is set to leave the EU in less than seven months but, realistically a deal needs to be reached this fall to allow lawmakers to ratify the agreement. A U.K. government spokesperson reconfirmed an October deadline earlier this morning.