Daily Market Update

Equity Markets Up; U.S. Dollar Rather Quiet

October 16, 2017

The U.S. Dollar is trading in familiar ranges following a short week where the main topic was inflation. Consumer Price Index figures for the U.S. on Friday failed to deliver and officials as well as traders are wondering if indeed price growth will remain subdued longer than the Fed estimates.

USD

The U.S. Dollar is trading in familiar ranges following a short week where the main topic was inflation. Consumer Price Index figures for the U.S. on Friday failed to deliver and officials as well as traders are wondering if indeed price growth will remain subdued longer than the Fed estimates. According to Fed Chairwoman Janet Yellen, current slow inflationary growth is a temporary effect and expects that the measure will pick up steam. The Fed’s chances of a hike in December stand at 76.7%, but future tightening into 2018 is now clouded by a bit of doubt over sufficient progress in indicators.

One saving grace on Friday was the upbeat reading in the University of Michigan Consumer Confidence survey, which revealed a reading five points above expectation. Some analysts feel his development, while very minor, could signal a rosier picture for consumer spending, that if strong enough, could propel inflationary growth and thus serve in greenback appreciating long-term.

 

EUR

The Euro is flat after a weekend with more headlines on the geopolitical front. Spain continues to struggle in reaching an agreement with the separatists in the region of Catalunya, whose president Carles Puidgemont is now adamant that there is enough to officially declare independence. The talks continue, but the Spanish government may be forced tom exercise its constitutional right to absolve the region’s autonomy. It is quite a battle of words and high emotions weighing somewhat on the Euro.

Additionally, Austrian elections over the weekend ended with a 31-year old new chancellor, Sebastian Kurz, representing the conservative Austrian People’s Party. The center-right party will have to collude with the Freedom Party after both parties pushed the Social Democrats, current rulers, into third place. This dramatic shift in the landscape is detrimental to European Union members that ae hoping for further integration and openness to immigration.

 

GBP

Sterling is down this morning following news that Prime Minister Theresa May will visit Brussels to reinvigorate Brexit negotiations. Conservatives in the UK are wrestling with the idea of a Brexit that means just a clean exit without any deal and the ramifications of such action. Many items in the Brexit proceedings have been left with more clouds hanging over them than before and with companies readying to leave London and accept a hectic British reality, the Pound may be slated for further losses.

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