The U.S. Dollar is trading in mixed direction this morning following market reaction to the dovish tone of Federal Reserve Lael Brainard in regards to the Fed rate outlook.Unlike her colleagues who recently have presented arguments for an interest rate increase sooner rather than later, Ms. Brainard asked the Fed to stick to “prudence” when it comes to alternating the accommodative environment the economy is operating under currently.
As a result, stock indexes worldwide are flat, no longer in a downward spiral, and investors are feeling some ease in what was the most downside market since Brexit.
The greenback is still gaining against commodity-based currencies, which are mostly hurt by the wild swing in oil prices. Both OPEC and the International Energy Agency changed their forecasts for 2017 when they predict an ongoing oil glut. MXN continues to trade near its worst level on record and CAD is at its weakest price since the start of August.
The Euro remains in familiar ranges, but is trending downward this morning on the basis of disappointing investor confidence. The ZEW Center for Economic Research in Germany released its investment confidence index for September revealing no changes in optimism, although economists expected a very high confidence reading.
Things in the Euro-zone are stagnant while a few crises are brewing, primarily the lack of coalition in Spanish government and political back and forth in Italy over executive powers.
With support for the established order falling and the economy progressing slowly regardless of central bank action, the Euro has depreciated by 1.2% since mid-August.
Pound Sterling weakened against USD following the release of underwhelming inflationary growth data. In fact, the “quid” has not stopped falling this morning, almost 1.0% down from its open in the North American session. Inflation remains at a measly 0.6% pace according to August figures, far less than expected by surveyed analysts who figured the weaker Pound had increased price pressure on imported goods.
GBP is on quite a losing streak after having gained on better-than-expected post-Brexit economic indicators a few weeks back, already down 1.8% since September 6.