The U.S. Dollar bounced back as markets await President-elect Donald Trump’s press conference at 11AM following the farewell delivered by President Barack Obama. A new era will start and traders around the world are hoping that in the midst of economic growth, Trump can deliver a spending package that can boost the pace moving forward. His positions and discourse have sparked controversy, but his assignments to the cabinet are good news in the eyes of many industrial leaders. The greenback is currently at multi-year, multi-month, and even record highs against most currencies.
With no data scheduled for today, expect reactions and statements to absorb headlines. Stock indexes around the globe are on the rise with the buck, so we will monitor if the positive correlation with USD continues.
Pound Sterling declined to its lowest level since October 25th following mixed economic data that primarily disappointed last month. Although industrial and manufacturing production revealed a better picture last month, the UK trade gap widened, meaning that exports are still not taking off as expected with such a cheap GBP.
“Hard Brexit” concerns are only mounting and the mood in the country is one of economic insecurity. The hardliners pushing for separation, yet asking to stay as members of the single market, have only damaged the UK’s image to the rest of Europe. Negotiations could turn very sour.
The Mexican Peso is swimming around its worst ranges of all time against the USD with growing doubt over the future of healthy, reasonable, and friendly trading terms between Mexico and the U.S. Banxico, the central bank, aimed at recovering the currency’s value since last week by selling USD positions and taking back Pesos out of circulation.
Unfortunately, that game can only be played for so long, and while banks may gain from such dramatic swings, it did nothing to protect our southern neighbor’s currency. The Mexican economy depends on good relations with the U.S. that seem to be compromised by Trump’s harsh tone in regards to NAFTA, immigration, and culture wars. It’s possible this will be a new normal for Peso with ongoing depreciation until something is said to amend the currently ugly situation.