Daily Market Update

U.S. Dollar faces push-back regardless of good data

November 02, 2018

The U.S. Dollar is trading in weak ranges, highlighting a week that was characterized by recovery across board for all counterparts as risk-appetite increased.

Overview

Markets have been subject to tremendous swings, but this week established itself as one for seeking resolutions to issues that created some economic gridlock.

While Europe is dealing with Italy spending woes, it is also trying to push for a deal on Brexit. Additionally, China and the U.S. are said to be planning on drafting a trade agreement and discussing a friendlier way forward at the G-20 Meeting in Buenos Aires at the end of this month.

The Employment situation in the U.S. continues to be great, with non-Farm Payrolls up by 250K in October, exceeding the estimated 200K. Better yet, wages improved with Average Hourly earnings advancing as expected by 0.2%. Regardless, the current risk-appetite in markets is driving a recovery against the greenback, which climbed by 2.6% according to the Bloomberg Dollar Spot Index, around a 16-month best.

 

What to Watch Today…

  • Factory Orders 10AM
  • Durable Goods Orders 10AM

The complete economic calendar can be found here.

 

EUR

The Euro is attempting to mount a comeback, but it has not had a lot of positive news to base its rise on. Worries over who will take over as de facto leader in European affairs after German Chancellor Angela Merkel leaves is causing many economists to ponder who will stand up to defend the EU in the way the four-term leader had to.

Facing opposition across the Euro-zone to further integration will be the EU’s biggest challenge in the next few years. However, the economy is not in a downturn as Italian and German Manufacturing PMI’s both released this morning revealed expansion. Perhaps the Euro may come alive later in the quarter.

GBP

The Pound is on a revival tour following a week where the U.K. hit a bit of trifecta. On Monday, the U.K. Budget announcement sounded like a workable plan for the country as it tries to spend more on public items that have seen reduced attention and resources for years after the financial crisis. On Wednesday, we heard about Brexit Secretary Dominic Raab’s determination to have a deal worked out by November 21st.

Finally, on Thursday, we were shocked by a more optimistic and hawkish Mark Carney, who presented a positive view from the Bank of England which envisions a deal being worked out on Brexit and their ability to tighten monetary policy down the line. This all came after Sterling witnessed a loss of 2.6% in value throughout October.

 

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