Daily Market Update

U.S. Dollar Survives After Weak GDP Figures

January 26, 2018

The U.S. Dollar traded in terrible ranges the last few days, making this the seventh consecutive week of losses, which represents then worst losing streak since 2010.

USD

Today happens to be a day of minimal losses despite disappointment in Gross Domestic Product growth, which failed to reach 3.0%.

The quarterly figure came in at 2.6% for Q4 2017, but Personal Consumption grew 3.8% and Durable Goods Orders climbed 2.9%. Those two figures were expected at 3.7% and 0.8% respective, so the mixed data seems to be holding the dollar together.

President Trump spoke at the Davos Forum this morning and while he spoke optimistically about trade as well as the economy, his statements did not convince traders out there about the administration’s intentions with the dollar. It looks as if the 2.6% pace is not seen as terribly detrimental to the Fed’s plans of hiking rates further this year, but overall the greenback will continue to be fragile in the near-term since those comments by Steve Mnuchin about the benefits of a weak dollar will be hard to get away from.

 

EUR

The Euro has appreciated by 3.3% this year and is now trading at its highest level since December 2014. Based on the European Central Bank’s assessment yesterday, the economy of Europe is in great shape and plans for eliminating quantitative easing are still ongoing for September.

There seems to be little in the way of Euro strengthening, but officials seem determined not to talk up the currency too much. Additionally, ECB President Mario Draghi does not want FX fluctuations to be affected much by statements and also does not wish for others to talk down their own tender.

 

GBP

The Pound has jumped in value by an impressive 5.1%, recovering plenty of the losses experienced since then Brexit referendum. Both parties to Brexit talks are ready to change their tone, with multiple compliments sent to one another from one official to the next.

Chancellor of the Exchequer Philip Hammond spoke candidly yesterday and said it was important for the EU and the U.K. not to have divergence in their economi9c growth and that they can still function as partners within a new deal. The U.K. is also willing to maintain plenty of EU laws in place for years to come. Perhaps it’s a divorce with some benefits.

 

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