The U.S. is down across the board this morning, most notably against the British pound.
Global equities are in recovery mode this morning, sapping any minor demand for the greenback as a safe-haven. The Japanese yen and Swiss franc are the biggest losers are risk appetite returned to markets.
The New Zealand dollar has been the big winner overnight, trading to a two-week high on higher than expected consumer prices and rising Asian stocks.
Later this morning, both industrial production and JOLTS will cross the wire but are unlikely to move the needle. Instead, we will look to events abroad surrounding Brexit and global risk appetite to dictate the overall direction of the greenback. In short, tighter ranges are likely.
EUR/USD is floating in familiar ranges again this morning. Italy submitted a last-minute budget to the European Commission yesterday. The EC has a week to make an assessment of the budget but Italy has remained steadfast in their intentions of having a 2.4% deficit next calendar year, higher than the 2.0% preferred by the EC.
The Euro did not sell-off even after Germany’s ZEW survey showed weaker current sentiment in Europe’s largest economy. A separate report showed that Europe posted a wider-than-expected trade surplus in August.
The British pound popped higher despite the lack of a breakthrough in the Brexit negotiations. The pound strength can be attributed to a sterling economic data released. The unemployment rate remained at a multi-decade low of 4.0%. Wages grew 3.1% year over year, beating estimates of 2.9%, which represents the fastest growth since 2009.
After a disappointing day yesterday, the mood surrounding the Brexit negotiations had a brighter outlook today with both PM May and French President Macron sounding more conciliatory. Macron said he believes “collective intelligence” will prevail. Bloomberg is reporting that leaders are hoping to have the outline of an agreement ready for Wednesday to allow the final divorce agreement to be signed off in mid-November. The ambitious feat would benefit the sterling if completed.