Daily Market Update

Dollar Erases Last Week’s Gains; Volatility Ahead

December 18, 2017

The U.S. dollar is down across the board this morning, giving up some of its broad gains from last week.

USD

The dollar’s losses come despite apparent progress on the Republican efforts to reform taxes. It appears that the House and the Senate have agreed on a bill that reconciles the differences between the original House and Senate versions. GOP leaders look to vote on the bill by the end of the week with the hopes of the President signing it into law before the Christmas holiday.

There is a good amount of economic data slated for release this week and we expect increased volatility over the next two weeks as companies square positions before the end of the year. We also expect lighter trading conditions towards the end of the week.

Tomorrow sees the release of housing starts, followed by existing home sales on Wednesday. Revised third quarter GDP will cross the wires on Thursday, while Durable goods and personal income will round out the week on Friday.

 

ZAR

The South African rand was the biggest mover overnight, surging 2% against the U.S. dollar, pushing to a three-month best. The move comes as traders have bet that Cyril Ramaphosa will become the next leader of the ruling party. Ramaphosa has pledged to revive the struggling economy and stamp out corruption. However, the race is fairly close so if Rampaphosa is unable to win, expect a major sell-off in the Rand.

 

GBP

The British pound found some relief overnight, gaining against the U.S. dollar. The sterling has been under pressure this month on Brexit headlines. Indeed, the sterling is the worst performing G-10 currency so far this month. Prime Minister Theresa May will give an important speech at 10:30 Eastern time. She will set out her plan to lawmakers on how any transition period may work once the U.K. leaves the EU. She will need to thread the needle in an effort not upset EU negotiators while also facing pressure from those within her own party.

 

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