The U.S. Dollar is off to a weak start, maintaining the negative trend of December 2017.
Markets are still awakening after the holidays, but data in Europe has already caused major damage to the buck, which is expected to continue tumbling for the most part this year. We shall see if the Markit U.S. Manufacturing Purchasing Managers’ index produces or inspires any immediate changes in the greenback’s fortunes.
Plenty of statistics this week will help guide the dollar’s direction, with any disappointment sure to sink the vulnerable currency further. Congress returns to start debate on a spending budget and have until January 19th to avoid a government shutdown. We are sure likely to hear about major expenditures this year as well as cuts. Economic growth and repatriation of funds from companies holding assets overseas will need to be stellar to push the dollar higher any time in the short or long-term.
The Euro is trading at its best level in three years following jumps in the PMI readings in the Euro-zone. PMI Manufacturing had a 60.6 reading as expected, but it impressed most in France at 59.3 over the estimated 58.8. Expansion in France is a welcome sign as President Emmanuel Macron steps up to be the go-to leader in the European theater.
We believe the shared currency will be a double-edge sword this year, likely to improve as the year’s speculation on tightening progresses, while also being an attractive asset in light of dwindling global markets. Euro can operate as a preferred denomination for business and also as a safe-haven when markets see losses, face risk-aversion.
Sterling remains at a high point, despite lower-than-expected PMI figures. No matter what Pound remains strong and will not start seeing any losses until trade issues start being highlighted during, what we assume will be incredibly tough Brexit deal talks. The separation is happening, but will commerce survive the turbulence?