The U.S. Dollar reversed some of its losses from yesterday after being crushed throughout all trading sessions based on the uncertainty over policies under Trump’s administration. The U.S. President was quick to sign executive actions, particularly taking pride in taking the United States off as a signatory to the Trans-Pacific Partnership. The agreement with nations of the Pacific Rim may be an initial sign of a more protectionist approach to international trade. Markets and the dollar suffered as a result, bringing the Bloomberg Dollar Spot Index down 1.7% for the year thus far.
President Trump and nominee to head the U.S. Treasury Dept., Steven Mnuchin, stated that the dollar may be too strong for its own good and needs further decline. “From time to time, an excessively strong dollar may have negative short-term implications on the economy,” wrote Mnuchin responding to questions from the Senate.
Certainly today there will be data out at 9:45 and 10AM gauging Manufacturing PMI and Existing Home Sales figures. The impact of indicators on the dollar may alleviate the depreciative pressure from bearish sentiment and statements.
Pound Sterling fell following the UK Supreme Court’s ruling to uphold its early decision to have the executive branch seek permission from Parliament prior to invoking Article 50 and starting the countdown of a 2-year process to fully separate from the EU.
The verdict creates a delay for Prime Minister Theresa May who would like to start as soon as March. Although strong data has carried the Pound forward along with a more determined Brexit strategy, the pressure is now on parliament to perhaps discuss the future and bring to the table hesitations from constituencies that would like to prevent the ugly divorce regardless of the referendum.
The Euro halted its four-day winning streak, coming down from its highest level since December 7th. Composite PMI for the Euro-zone remained stagnant last month, with the exception of significant expansion in France. Inflation and output are increasing in Europe, but the political risks abound.
German officials spoke yesterday of the beginning of a new era where the U.S. may be highly unpredictable in its stance of supporting the established order. The Brexit, other nations electing lawmakers that are fond of splitting, the insecurity from terrorism, and presidential elections all form a cluster of worry for the monetary union.