The U.S. Dollar is in the middle of a major surge, particularly against the British Pound as the Brexit Deal on paper seems to be problematic.
Indeed, the U.K. is in a bit of a political crisis as cabinet ministers started quitting Prime Minister Theresa May’s administration as she is pushing here Brexit draft to be approved. Additionally, the buck is stronger against Euro and other currencies from the region as the effects from a no-deal or sudden changes in the U.K. downgrade their prospects.
Retails Sales advanced in October per the release of figures this morning. An expected 0.5% expansion came in at 0.8%, further solidifying what we have seen for months: consistent economic performance that exceeds forecasts. With this trend ongoing, expect swings, but primarily in the favor of the greenback as these crises keep being confronted globally.
What to Watch Today…
- No major events scheduled for today.
The complete economic calendar can be found here.
The Euro is swimming in familiar waters as it stayed subdued based on political headlines. We are currently seeing Euro and Pound almost in lockstep with so much on the line with the Brexit papers. With Gross Domestic Product growth for the Euro-zone registering as expected yesterday, we shall see if inflationary growth follows tomorrow. Consumer Price Index figures tomorrow are expected to be at 1.1% average for the year. Anything less could certainly sink Euro into new 18-month low levels, which is already near.
The Pound is at the mercy of Brexit developments, which thus far have played out as a nightmare for Sterling traders. Dominic Raab, the U.K.’s Brexit Secretary, quit earlier in the trading session on the other side of the Atlantic. A much-less controversial figure than his predecessor, David Davis, Mr. Raab announced that he could no longer serve in his position when it is clear that Britain is headed for EU-customs inclusion indefinitely.
Hardcore Brexiteers may welcome the sentiment and the affront to Prime Minister May, but now the future of the deal and Ms. May’s employment in doubt. We may see swings within wide ranges, moves of 1.0-2.0% one or the other within minutes will not be surprising as this is all sorted out. This deal might mean the end of May’s reign and the takeover of leadership from the other side of the aisle.