Daily Market Update

Reaction to Strong Data Finally Aids a Greenback Recovery

November 16, 2017

The U.S. Dollar is attempting to mount a bit of a comeback after ongoing depreciation since last week.

USD

Overnight trading sessions in Europe and Asia digested the positive consumption data from across continents as a positive signs and their respective stock indexes climbed.

Although the economic situation remains steady, the greenback’s potential for further advancement is being held back by doubts over tax-reform success after key members of congress criticized the bill’s burden on middle class families.

Additionally, regional business surveys are not meeting expectations. Optimism in the New York region was down per yesterday’s release while today’s gauge of the Philadelphia Fed Business Outlook also came in a lower reading than forecast. Industrial Production, however, came in at a solid pace of 0.9% growth, exceeding the expected 0.5%. We are hoping the buck is driven upward by this shortly.

 

EUR

The Euro’s momentum eased after a recovery in risk-appetite that saw markets flourish. In recent days, the shared currency was boosted by risk-aversion that diminished record gains in stocks. The return of optimism across global markets is not terrible for the Euro, but it does affect its ability to appreciate if not needed as a safe-haven.

Politically, things may start heating up once again in Germany as Chancellor Angela Merkel struggles to build a coalition within government. It is worth remembering that while Merkel was re-elected, her party and allies lost plenty of seats to far-right anti-establishment candidates who differ greatly in a vision for the country as well as the EU. If any headlines become the focus on a failure to lead without obstacles, the German drama may weigh on the Euro as we close the year.

 

GBP

The Pound stayed afloat as Retail Sales figures revealed that the expected contraction for October was not as bad as estimated. Sales, excluding fuel costs, shrank by (-0.3%), less deep than the forecast (-0.5%). Nevertheless, the UK political instability continues and the EU is wondering if negotiations will go anywhere.

Lawmakers on the EU side are hoping that British officials provide more clarity, but the infighting within Prime Minister Theresa May’s own party is making things quite difficult. Discussions are starting among diplomats about preparing for a failure to reach any type of deal.

 

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