Daily Market Update

Sterling Down as Politics Weigh Heavily; Heavy Data Week Starting

November 13, 2017

The U.S. Dollar is trading in familiar ranges after an uneventful last week that saw it gain some ground primarily as a safe-haven to dwindling markets.

USD

The risk-appetite that ended in October with record-high performances for stock exchanges like Dow Jones started fading in November.

Since October 19, the greenback has strengthened by 1.3% based on an almost guaranteed Fed interest rate hike in December, good data, and optimistic markets. This week’s slew of indicators may move the needle again.

We will see if there are any headlines out of President Trump’s Asian tour as it comes to a close and if focus in any legislative achievements for year-end provide any moves this week. For now, the buck is likely to hold on to current levels with danger to lose to the Euro as the shared currency benefits from risk-off sentiment.

 

EUR

The Euro is up almost 1.0% since Thursday as a result of declining markets, returning to its role as safe-haven based on its low-carry trade value. The low interest rates in the Euro-zone attract investors when there is caution in stocks.

More importantly, data for the continent’s members is expected to show expansion and with no political risks in sight for the short-term, the Euro is will likely stay consistent with a chance for appreciation based on figures. U.S. Dollar rallies against the currency continue to be mostly short-lived, typical of 2017.

 

GBP

The politics of the UK continue to present obstacles for the Pound, which has fallen by 1.0% in the last three business days. Prime Minister Theresa May is now facing the possibility of being ousted by a no-confidence vote from her own at the Conservative Party. The Tories are split on how to approach Brexit and achieve a deal out of the European Union, but they agree that they do not like May’s handling of things.

Furthermore, the opposition Labour Party is determined to point out all the flaws in Brexit research by the government and some are even asking what could be the chances of reversing Brexit entirely. Fundamental data for the UK may remain resilient this week, but the leadership crisis in Britain is a Sterling nightmare.

 

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