Daily Market Update

Dollar Claws Back during Quiet Trading

October 12, 2018

The U.S. dollar is modestly stronger against most of its counterparts this morning. However, the greenback overall is heading for its first weekly loss in three.

Overview

After getting smashed for most of the week, global equities are on the upswing to end the week. The S&P 500 looks to end its longest slide since 2016 as American stock futures point to higher open. Some of the relief for equities can be attributed to news that the Trump administration will not label China a currency manipulator in next week’s Treasury report, a bright sign as the trade war continues to rage on. President Trump is set to meet China’s President Xi in late November

The economic docket is light in the States with only the University of Michigan consumer confidence print out at 10 a.m. Eastern. The Fed’s Evans and Bostic are scheduled to speak at separate events and their comments will be worth watching. However, expect markets to take their cues from U.S. equities today as earning season for banks starts today.

EUR

After rallying yesterday, the Euro is softer this morning as the U.S. dollar claws back from recent weakness. The economic docket showed that Eurozone industrial production surprised to the upside and registered an output of 1.0% month over month in August, beating expectations of a 0.5% rise. German consumer prices were unchanged at 2.3% year over year, but market participants have ignored the fundamental data.

GBP

The sterling continues to trade with the prevailing Brexit headlines. The sterling initially popped higher and touched a three-week high overnight. But those gains were short-lived. We are expecting the U.K. government to clarity its position today amidst reported unease among Cabinet members about Britian not setting a time limit should it agree to stay in the customs union if a trade deal is not possible in the short-term.

Nevertheless, the sterling is set for its second weekly advance as hopes of Brexit deal have brightened. Indeed, early this morning EU Budget Commissioner Guenther Oettinger said that “It does appear possible there will be a breakthrough.”

 

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