The U.S. Dollar fell against most currencies with Sterling being the great exception as Brexit developments have turned investors truly sour on the future of the economy.
Trade still continues to be a main driver of headlines and FX flows, but the biggest event from the end of last week, agreement to oil production cuts, lifted commodity-based currencies. In particular, Mexican Peso and Canadian Dollar are up about half a percent since Friday afternoon.
We do not have much to await in terms of data until inflationary numbers in the form of consumer Price Index figures Wednesday. There are changes in the White House that could create some news and attract reaction, but we doubt much other than resolving the diplomatic talks on trade and the arrest of Huawei’s Chief Financial Officer. Scandal as well as economic breakthroughs may lead us through uncharted waters in December.
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The Euro struggled to gain much against the greenback, but still did last week and may be headed towards higher returns as we take on some risk events the next few days. The European Central Bank will meet on Thursday to announce their policy decision, which is highly expected to end in the complete finalization of the EU’s quantitative easing program that helped lift the Euro-zone economy out of the crisis.
Low figures for the region in terms of 0.2% GDP growth and little to no inflation has fueled some speculation that the QE program could be said to end later and not now. We highly doubt it and feel everything will go the course and the ECB will stop with QE as an active loosening monetary measure to aid the financial system.
The Pound fell another 1.0% over the weekend following controversial news that Prime Minister Theresa May will pull her deal out of a key vote in parliament that was scheduled for tomorrow. At 10:30AM, the PM will be speaking to the House of Commons. Cabinet members are rumored to be planning their own ‘brexits’ while other believe May is just trying to delay her own ouster by delaying a vote on her deal.
Is this the endgame? No, we are not done yet. This will only keep getting more convoluted unless there are major changes and it looks possible leadership could be one of them soon.