The U.S. Dollar broke a losing streak of five days, rising against most of its G-10 counterparts.
Yesterday, Euro hit a 3-year high mark against the “buck,” markets flourished and new record highs were reached. NASDAQ and S&P 500 indexes started the year off at their best of all-time. We shall see if the momentum driving risk-appetite in any way also propels the greenback, which would follow the “Trump trade” effect that we saw at the start of 2017.
We are waiting for data at 10AM as ISM manufacturing and Construction spending gauges are released. It is possibly hard for the data to have any impact, but the 2PM FOMC Minutes could spark more interest among investors as participants look for clues on last meeting’s dissenters when it came to hiking interest rates. Signs of a loss of consensus within the Fed could be a big dollar negative.
The Euro reached its highest levels since 2015, but has gradually lost its resurgence. Unlike the buck, the euro has quickly seen benefits form its region’s economic performance and this trend is likely to go on all year. Without needing to hike, the optimism behind Euro-bloc policies is improving the shared currency’s prospects.
German unemployment fell to a record-low of 5.5% while other figures out of France remained impressive. We believe Q1 could provide gains for Euro that will stick around long-term with downward swings based on central bankers remaining faithful to intervention and talking down the currency indirectly.
The Pound halted its strengthening, the best since September though. We see a slow year for the UK ahead as Brexit trade terms drag on in a detrimental back-and-forth. Changes in leadership could come soon and that could swiftly turn the tide against Pound, which we have now learned is incredibly resilient to even the most obvious of downside risks.