After falling all of last week, the U.S. dollar is staging a minor comeback this morning.
After falling all of last week, the U.S. dollar is staging a minor comeback this morning. The Bloomberg Dollar Spot Index fell for seven consecutive sessions before pointing up today. Hurricane Irma wreaked havoc on South Florida over the weekend but avoided a direct hit on Miami and Ft. Lauderdale, significantly decreasing the estimated damage. Still, estimates are still north of $50 billion in damage caused by wind, rain and storm surge.
There was also speculation that North Korea would test a missile over the weekend which sent safe-haven currencies higher late last week. When the threat didn’t materialize, global equities shot higher and weakened the Japanese yen.
This week’s economic docket is rather light and there is no major data slated for today. The biggest risk event comes in the way of Retail Sales on Friday. Empire state manufacturing and industrial production will also cross the wires on Friday. In the meantime, the dollar should enjoy a short reprieve from heavy losses experienced last week.
The Canadian dollar continues to rise against the U.S. dollar. The “loonie” is at a two year high versus the greenback. Most of the Canadian dollar’s strength can be attributed to the surprise interest rate hike last week by the Bank of Canada. Although, oil holding above the 100 day moving average has also propped up the currency. The debate now seems to be, where is the “top” for the Canadian dollar as the currency has broken some technical barriers over the last three trading sessions.
The British pound is set for a big week as “Brexit” will retake center stage and the Bank of England has its “Super Thursday”. Tonight, the House of Commons is expected to vote and pass Prime Minister Theresa May’s Brexit bill. The bigger challenge will be whether May can keep her draft free of amendment at the so-called committee stage, similar to the process in the United States congress.
Attention will then shift to the release of inflation data tomorrow. The Bank of England will meet on Thursday to round out the busy week. We do not expect any further clarity this week surrounding Brexit so the GBP/USD may continue to experience choppy ranges.