The U.S. Dollar is sitting in familiar ranges after hitting multi-month highs against its closest counterparts last week.
The end of October was highlighted by a slew of mixed data that managed to impress and boost the dollar, setting it towards a path of strengthening as the year comes to a close. With the potential for tax reform, the choreographed Fed hike for December, and the ongoing pace of economic growth the greenback is likely to keep its recent surge gains.
With not much left in terms of data points to be released this week, focus will be placed on President Trump’s trip to Asia and any headlines that may come from there. We foresee few downside risks as we head into Veterans Day weekend.
The Euro remained in tight ranges without much in the horizon in terms of economic indicators. Purchasing Managers’ Index last week showed that manufacturing and services are consistent. Politically, the continent seems to be working towards normalization as Catalunyan President and leader of the independence movement Carles Puidgemont turned himself in to Belgian authorities. Euro fell only slightly after the news, sticking to rates seen back in July. The quiet week will likely maintain the shared currency around current levels.
The Pound is weakened after taking a pounding off of news of discord amongst Prime Minister Theresa May’s cabinet and political party leadership. After a sexual harassment accusation resulted in the Minister of Defense quitting, the politics of the UK seem more fragile than at any point since the Brexit referendum. The hike by the Bank of England last week did little to dissuade concerns over the downside risks of Brexit to economic growth.
All the negativity seems to be usually ignored by fundamental indicators that show improvement as expected or close to it. Sterling will remain in this cycle of swings until there is a more definite guideline to talks and the achievements that may come from eventual compromise. Thus far, too much uncertainty keeping Pound down.