Daily Market Update

U.S. Dollar Negative as Things Look Rosy in Europe

January 04, 2018

The U.S. Dollar slipped overnight as a result of solid economic activity in Europe and the UK.

USD

On the American side, ADP Employment Change revealed that 250K payrolls were added, exceeding the estimated 190K. Nevertheless, Initial Jobless Claims also reached 250K, perhaps a sign that there is balance in the labor market with steadiness instead of rapid growth. Thus far, no reward for the dollar.

The greenback had gained slightly yesterday on FOMC Minutes, but a closer look made analysts cast doubt over the continuation of hiking and if the dissent amongst a few members could grow. Political distractions are also making headlines that are not supporting the dollar, especially in the midst of high optimism in other regions such as China, Europe and emerging markets.

 

EUR

The Euro rose based on strong data pointing that the Euro-zone reaching its fastest pace of economic activity in seven years. The Composite Purchasing Managers Index climbed to 58.1 over the expected 57.5, indicating a much greater expansion than economists foresaw at the end of the year.

It is hard to not give the shared currency props since the economic advancement we’ve become accustomed to will only increase the chances of tightening down the road. This will be perceived as timely and appropriate, thus improving bets on Euro as the year goes.

 

GBP

The UK saw its PMI also show better figures and it propelled the Pound to its best level since the start of December. Things are slowly gearing up in Britain following the holidays, but certainly economic statistics keep on providing fuel to the buoyant Sterling. We see Pound staying stubborn throughout the year, ignoring downside risks and delaying its deserved depreciation.

 

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