Daily Market Update

U.S. Dollar only better with others struggling

October 30, 2018

The U.S. Dollar is dominating across the board as uncertainty remains over the future of tariffs and trade conflicts.

Overview

In November, Chinese Premier Xi Jinping and President Trump will discuss how to solve the tit-for-tat trade war during the G-20 summit in Argentina.

Additionally, the wild swings in stock markets have once more provided the buck some fuel to rise as a safe-haven. In comparison to the U.S., economic slack is weighing on the other side of the Atlantic as U.K. and Euro-zone developments keep sinking their respective currencies.

We have Consumer Confidence out at 10AM, which likely will only solidify the dollar’s position as the strong asset. We do not see much getting in the way of USD strengthening until Friday when we will take a look at the Employment Situation and Factory Orders. Any sign of domestic payroll and productivity slowdown could spark a recovery for other currencies, but the case for the greenback is strong now even with elections just around the corner.

 

What to Watch Today…

  • Consumer Confidence 10AM

The complete economic calendar can be found here.

 

EUR

The shared currency has seen rough times recently based on concerns around Italy’s spending abilities and the near end of German Chancellor Angela Merkel’s leadership. Her political party, the Christian Democrats, have gradually lost popularity, which convinced Ms. Merkel it was time to announce her stepping down as go-to party leader.

Naturally, she also explained that her time as head of state will also come to an end in 2021 since she will not seek re-election. Economically speaking, the continent is experiencing a lag as Gross Domestic Product growth for Q3 came in at a revised 0.2% under the original 0.4% reading. Euro prospects for growth hang on the idea of the end of quantitative easing in December by the European Central Bank and the potential for interest rate hikes in late 2019.

GBP

The Pound has already lost over half a percent since yesterday based on lack of faith in Britain’s future. Philip Hammond, the Chancellor of the Exchequer, presented his budget and explained that the U.K. should maintain a cushion for the Brexit transition. The move seemed like a nod to pro-Brexit Tories who want England to prepare for a no-deal scenario with the EU.

However, Sterling traders are worried and their outlooks have been downgraded. Tempus’ Senior FX Trader Juan Perez appeared on Bloomberg’s Daybreak Europe radio broadcast highlighting that it was difficult for the U.K. to have any clarity on expenditures until Brexit comes to some sort of solution, which ultimately will not help Pound long-term.

For what is left of this week, the Bank of England may indicate further doubt and thus negatively affect Pound. BOE governor Mark Carney is expected to point out the difficulties in seeing a prosperous outlook without some trade deal in place.

 

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