Daily Market Update

U.S. Dollar flat ahead of start of Fed Meeting and UN speech

September 19, 2017

The U.S. Dollar remained mostly flat against its major counterparts, save the Aussie and Kiwi dollars, which are benefiting from positive prospects in the Chinese economy and growth in pacific market stocks.

USD

The U.S. Dollar remained mostly flat against its major counterparts, save the Aussie and Kiwi dollars, which are benefiting from positive prospects in the Chinese economy and growth in pacific market stocks. Today, the world’s eyes will be focused on President Trump’s remarks to the United Nations General Assembly, addressing concerning issues with nuclear proliferation in both North Korea and Iran. A tone of unification with global leaders is expected, but markets have learned to prepare for the unforeseen. Recent threats have not shaken investors and safe-havens such as the Japanese Yen are on a downward trend as equity indexes have flourished with risk-appetite still on.

The Bloomberg Dollar Spot Index has recovered by 1.1% in the last ten days as the “buck” aims to come back as the spotlight moves away from the decline in the odds of another hike by the Fed this year. Tomorrow’s announcement will be followed by a press conference in which we will monitor any signs of renewed hawkishness that could propel the dollar after disappointing housing data yesterday.

 

EUR

The Euro improved overnight to its best level in just over a week guided by increased faith in the economic outlook for the European Union and higher chances of tightened monetary policy by the European Central Bank. Signs of continued confidence were displayed in the release of the ZEW Surveys for Germany and the EU, which both gauged higher than predicted. It is tough to see any obstacles to Euro appreciation, or better yet, potential for its downfall as the current state of affairs seems to be much in order.

 

GBP

The Pound dwindled after reaching its best level since the Brexit referendum as a result of; you guessed it, worries over the future of Brexit talks. Negotiators will be back on the table on September 25th after frustrated EU officials indicated that very little progress has been made thus far. Following the Bank of England’s hawkish tone after its monetary policy meeting last Thursday, BOE governor Mark Carney spoke yesterday about the need to comprehend that inflation is problematic and interest-rate increases down the line may come to combat above-2.0% inflation, but quite gradually.

More importantly, economic growth has been threatened in the first half of the year and although the Bank of England may raise interest rates, it is not because of the right reasons. We shall see if the Pound gains as a result of an uptick or remains subdued, depreciates, as the economic reality sets in: lack of openness after Brexit hurts future output and employment.

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