Daily Market Update

Dollar Rallies Ahead of Bond Auctions

February 20, 2018

The U.S. Dollar gained modestly across the board yesterday while American traders enjoyed the President’s Day holiday. The greenback has continued its momentum today.

USD

If the dollar holds onto its gains, it would be the third consecutive day or the best run in two months. The dollar has been the beneficiary of widening Treasury yields ahead of a number of bond auctions this week.

There is no major economic data on today’s schedule. Tomorrow, the Federal Reserve will release the minutes of its January meeting, Janet Yellen’s last. According to the Fed Fund Futures, traders are pricing in a 100% chance the central bank boosts rates by a quarter of a point at their next meeting in March. Again, policy divergence is not helping the greenback like it did in 2016.

 

EUR

The Euro continues to trade lower after touching multi-year highs earlier last week. The Euro has made several attempts to break higher but profit-taking has kept the common currency in check. The Euro is lower this morning after a report showed that German investor confidence trended lower. The ZEW survey showed investor sentiment dropping in February in the wake of recent market volatility. The 92.3 reading was down from 95.2 in January. Despite the hiccup in investor confidence, the outlook for Europe’s largest economy remains strong.

 

GBP

The British pound was able to buck the trend of stronger U.S. dollar overnight, holding familiar ranges despite soft economic data. U.K. manufacturing orders slipped to 10 in February, from 14 in January and failed to miss estimates of 11. Brexit continues to produce its own slew of headlines. The Business Insider reported that the European Parliament is preparing a “detailed” 60-paragraph resolution which will call for more flexibility in the future relationship talks with Britain.

 

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