The U.S. Dollar is fluctuating in familiar ranges, having recovered after losing ground in Asian and European trading sessions. Last week culminated in Gross Domestic Product and Durable Goods Orders figures revealing a slowdown and a contraction respectively. The economic momentum driving the dollar’s fortunes seems to have diminished.
Although Personal Income and Spending met expectations this morning, the greenback is likely to depend on further market reaction to President Trump’s controversial policies. The ban on refugees and specified countries is unprecedented and we see high volatility all across the board pending on commentary and potential retaliation.
The Pound stayed resilient after surging last week based on a more determined process by the UK to separate from the European Union. GBP is up 4.0% in the last two weeks. More importantly, Thursday will see the Bank of England at its busiest while presenting their inflation report and announcing a decision on monetary policy.
Recently, BOE Governor Mark Carney sounded more positive in front of parliament when addressing Britain’s growth prospects. Fundamentals remain as strong as fear of a tumultuous result in a full Brexit. While the Pound has endured major hits, we see potential for further losses as the realities of the loss of interconnectedness start sinking in when Article 50 is invoked by PM May.
The Euro is trending in weaker levels following dovish reaction to good inflationary growth in Germany. Although German inflation is on the rise, the European Central Bank is going to credit it only to the increase in oil prices. Once energy costs are removed, the 2.0% inflation experienced last month goes down, thus not satisfying the ECB’s desired pace.
Over the weekend, French primary elections ended in Benoit Hamon winning the Socialist party nomination adding to the field of Presidential candidates Emmanuel Macron, and independent, and far-right winger Marine Le Pen. The latter proposes a French exit from the EU, tougher immigration, and protectionism.