The U.S. Dollar benefitted from good Consumer Confidence data, which enabled it to hit the brakes on losing ground to its main counterparts. Thus far this year, the buck has lost 9.6% of its value based on doubts over the political distractions, success in Europe, and dwindling fundamentals here.
However, the Fed has been a source of appreciation and although today there is not even a press conference after the FOMC announcement, the language within the statement could have a potentially positive impact if it mentions willingness to unwinding the balance sheet. Their hawkishness could surprise and add to chances of a move in September or if doubt is cast, a push for December that could sink dollar a bit.
We shall see if Home Sales do anything for the greenback as Construction figures have driven the currency higher recently, even if not for an extended period of time. Oil prices keep rising as curtail promises sound good to some futures-bulls, but some analysts predict the lowest of prices are yet to come as they see no balance down the line for the industry with other energy resources growing. Mexican Peso and Canadian Dollar moves mostly muted thus far.
The Euro is stuck around its highest level in about two years after Retail Sales grew in Spain and Consumer Confidence climbed in Italy. The fourth and third largest economies of the Euro-bloc respectively are showing consistent improvements after years of major struggle. Nevertheless, the fragile nature of current Italian politics still leaves a lot to be desired since reforms that are considered key to bettering banks and promote efficiency within government have not been pushed through.
Additionally, there are still forces interested in combating European integration. For now, things are steady and we see room for Euro strengthening. Only good figures here can start limiting the shared currency’s gains.
The Pound is surviving despite bad signs of economic growth. The preliminary reading of Gross Domestic Product for the second quarter of the year showed a measly uptick of 0.3% as expected, signaling what some have feared: that indeed Brexit negotiations and the anxiety over companies leaving are having a negative impact.
Furthermore, Brexit negotiations will take the August summer break with major issues unresolved after two rounds of talks that did not clarify the rights of EU citizens living within the UK or the amounts to be paid by Britain to be divorced and free to dream of great trade deals. We see Pound only staying around current ranges because of the dollar’s own weakness, but any sign of optimism in the face of political distractions here will eventually take a significant toll on Sterling when all issues with Brexit considered.