The U.S. Dollar is trading in mixed ranges this morning following a tough end to last week in which economic indicators signaled deficiencies and contractions in current consumption. As a result, the Bloomberg Dollar Spot Index fell and now it’s 1.7% down for the month. Traders are now reassessing the chances of the Fed hiking this year, which now stand under 50.0% since no figure indicates that the economy is heating up too quickly.
The lack of expansion in sales and long-term purchases cannot continue if the Fed is to gradually increase borrowing costs. A survey shows Americans are optimistic about the economy, but are frustrated with Washington, perhaps why future investing is on hold.
The only counterpart the buck is dominating at the moment is the Norwegian Krone, which is down bigly on news of the worst inflation level in two years. The struggles for the Nordic petro-currency make sense considering the awful time in oil markets. With no major data, we will see if news headlines affect the flow of markets as potential Russian meddling, Brexit talks, and North Korea continue to dominate the cycle.
The Euro remains swimming around its best levels in over a year, although momentum is stalled prior to the European Central Bank meeting on Thursday. Economists are wondering if there will be plenty to say about open-ended sovereign bond purchases, which could mean the central bank is not done maintaining some level of intervention to keep an easing environment.
Thursday could indeed mark a turning point for the currency if a hawkish ECB lead Euro to further merited long-term appreciation as it becomes clear they intend on tightening, however, if there is still talk of careful calculation and delayed action, Euro could decline slightly. The differences in economic performance are what matter most now and there is more doubt on our side of the Atlantic currently.
The Pound hit the brakes a bit, but is now close to its high for the year considering the frustration with figures out of the U.S. The second round of Brexit talks goes on this week where the UK hopes to soften the chances of a very high toll as it pays its obligations for leaving the continental agreement.
The last two weeks have seen a UK Brexit team having to concede to the EU lawmakers’ wishes for actual acknowledgement of a monetary penalty and inclusion of EU citizens as well as their interests. Retail Sales and Consumer Price Index numbers could swing Sterling one way or another as the currency is also becoming sensitive to data points recently.