The U.S. Dollar kept its recovery trend overnight, adding almost a half a percent of strengthening against most peers.
With little in terms of data to digest, the greenback seems to be rising along with positivity in equity markets. In fact, Atlanta Fed President Raphael Bostic spoke yesterday nonchalantly about where the rates are headed, saying that while hiking is appropriate, three or four interest rate increases this year might be tightening too fast. The comments did not keep the dollar from advancing.
Other central bank main officials will be speaking this week, the typically dovish St. Louis’ James Bullard and more centrist New York’s Bill Dudley. We shall see if their commentary starts weighing on fluctuations. Things will certainly pick up towards the end of the week as we look to measure if companies are making long-term purchases via PPI and if prices are going up with CPI.
The Euro fell to its lowest point in two weeks while the Euro Stoxx 600 gained, ultimately a sign of a negative correlation between stocks and the shared currency. Despite an expansion of German Factory Orders, which grew at 3.4% after months of decline, the Euro kept on sinking.
Additionally, the Euro-zone’s unemployment declined to its lowest level in about nine years. With potential tightening in the horizon, the Euro is likely to gain throughout the year, but there will be resistance to the rate going beyond its 3-year best, which was reached last week.
The Pound only lost a little bit of ground after a very dramatic Monday characterized by the reshuffling of Prime Minister Theresa May’s cabinet. Apparently things could have gone a lot better when it came to the memos and communication with staff, because there are reports of mistakes in realigning folks and many found themselves quitting.
No longer a shock, Sterling brushes off most concerns at the moment, but if the bad moments keep piling up, at some point the currency has to be punished. Even poor data was not a hit to the “Quid” as Retail Sales showed that consumers lowered their purchasing activity in the last three months of 2017.