Daily Market Update

U.S. Dollar in mixed situation as Euro re-emerges

November 16, 2018

The U.S. Dollar is trading in familiar ranges, as in; it’s not swinging in the wild ways it has become accustomed to in recent weeks or merely just days.

Overview

On average, Euro and British Pound moved within a 1.5-2.0% range, rapidly changing direction after a tumultuous week heavy on Brexit. The ongoing drama within the United Kingdom and the attempt at passing a satisfactory EU deal have benefitted both the greenback as well as the Euro against Sterling, which could sink even further with no happy solution in sight.

We go into next week with a resurging Euro that recovered ground against the dollar based on good economic indicators. Another currency to keep an eye on as it pushes for appreciation is Canadian Dollar, which is keeping traders scratching their heads in the midst of oil prices declining dramatically. For now, and as has happened before, the “loonie” and energy costs are not on a positive correlation. Our neighbor’s currency is recuperating as it erases a 1.5% devaluation that started the first day of November.

 

What to Watch Today…

  • Industrial Production 9:15AM

The complete economic calendar can be found here.

 

EUR

The Euro advanced by 1.5% this week with volatility in markets aiding the shared currency along with evidence of a consistent economy throughout the continent. Some manufacturing numbers earlier this month were of concern because they revealed contraction instead of expansion in Italy. Nevertheless, Gross Domestic Product growth and inflationary figures in the form of CPI came in just as forecast.

There are details such as the Italian budget and other nations trying to follow suit in ending austerity that may once again bring pressure on Euro as we close the year. However, volatility is high and the recent data being on the positive side are giving the currency some much-needed upward momentum.

GBP

Pound Sterling fell almost 3.0% since October 7th as negotiations in Britain for Prime Minister Theresa May’s plan are showing a chaotic environment that could lead to her ouster soon. Her cabinet members are drafting letters of resignation, her Brexit secretary stands now in opposition after quitting the post, and companies are desperate to know if they need to make deals on their own for contingency against a no-deal scenario.

We are baffled by how quickly things have gotten out of hand ahead of a deadline that has been kicked down the road time and time again. It looks as if any future deal for the U.K. will not be finalized by the current leadership in power. We have always assumed this would not turn out to be an easy process, but now it is looking like quite a negative for Pound and all else British long-term, into 2020.

 

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