The roller coaster ride continues. The U.S. Dollar is down with markets after President-elect Trump’s press conference, which left many quite disappointed. Equities and the dollar rejoiced for weeks believing in the prospect of major investment from the new administration that would further grow the already healthy U.S. economy. Indeed, there are promises of expansion and perhaps deregulation that businesses always welcome, but yesterday’s event was characterized by the process of creating, or avoiding, a blind trust while no details on the future were outlined. The post-election honeymoon may be over as uncertainty gets a hold of markets.
Jobless and Continuing Claims fell right in line with expectations, not surprising anyone since labor has been solid. We will see if the wildness continues, but the greenback is certainly now more volatile and under pressure.
Sterling is on recovery mode following consistent strong data and a shockingly new tone from the Bank of England. During a testimony in front of parliament, BOE’s Governor Mark Carney spoke positively about Britain’s economy, one that has resisted downside risks and is fundamentally better off than most outlooks post-Brexit estimated.
In fact, Carney said officials would likely revise their forecasts upward. This could prove to be a break for GBP, but the cloud of the official separation process will remain until there is an actual resolution and parliament votes to actively invoke Article 50.
The Euro is trading at its highest level since December 7th as a result of disillusioned dollar-bulls as well as good CPI and Industrial Production out of Italy, and France. Although the jump is significant, Italian lawmakers are in the midst of battle to revive their most troubled bank, Monte dei Paschi, through a substantial bailout. Numbers out of the Euro-zone are impressive for the last few months, but we see trouble ahead politically in terms of elections and the Brexit.