Daily Market Update

Dollar Rises on Poor Chinese and European Data

December 14, 2018

The U.S. dollar is soaring this morning as weak data out of China and Europe weighed on global risk sentiment and boosted the greenback.

Overview

Indeed, the Bloomberg Dollar Index rose to the highest level in 19 months. Retail sales in China, the world’s second largest economy both drastically failed to meet expectations highlighting what many deem as a global economic slowdown. Separately, China announced it would temporarily remove a retaliatory tariff on U.S. imported automobiles, adding to dollar strength.

The American economic docket could help spur further dollar strength. U.S. retail sales beat forecasts by rising 0.2% in November. Retail sales “control group” that excludes food services, auto sales, building materials and gasoline station, had its largest gain of the year. Industrial production and Markit PMI will cross the wire later this morning.

The Federal Reserve’s interest rate decision will be the highlight of next week. The Fed will meet on Tuesday and Wednesday with a decision coming at 2 p.m. on Wednesday afternoon followed by a press conference by Chairman Powell. We will also be keeping an eye on a partial government shutdown next week if President Trump and the Democrats fail to reach a deal.

 

What to Watch Today…

  • Industrial Production and PMIs

The complete economic calendar can be found here.

 

EUR

The Euro fell to the weakest level in just over a month against the U.S. dollar following poor economic data from the bloc’s biggest economies. Eurozone PMI dropped to 51.3, the lowest level in more than four years. While a reading above 50 indicates expansion, a slowdown is evident. France’s PMI was the most disappointing, but Germany’s reading also fell well below estimates.

GBP

The sterling also fell victim to widespread dollar strength overnight. Prime Minister Theresa May is still in Brussels in hope of securing more accommodations from the European Union. So far, it appears her attempts have not been fruitful. GBP/USD will remain vulnerable to headline risk surrounding Brexit.

 

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