Daily Market Update

U.S. Dollar Sees Upside After Underwhelming U.K. Data

February 21, 2018

The U.S. Dollar is trading in more favorable ranges this morning following mixed economic data out of the Euro-zone and United Kingdom.

USD

Lately, the greenback has swung wildly as volatility came back into markets.

Against its main counterparts such as Euro and Sterling, the buck has lost and regained 2.5% of its value within two weeks. Uncertainty over Brexit and concerns over stock indexes is starting to help the USD as a safe-haven, but its rallies have been shortly-lived.

We shall see Purchasing Managers Index figures as well as Home Sales released at 9:45AM with the biggest risk-event of the day at 2PM with the FOMC Minutes. Fed watchers will pay close attention to any specific language on the notes signaling at long-term gradual rate increments. If this comes as a result of the review, the buck could pick up some steam. Policy determination to increase rates may bode well for the dollar, but prior instances of overjoy have also been short-lived. Gains could be limited.

 

EUR

The Euro has fluctuated all over the place in the last two weeks, going from its best level in over three years to dropping almost 3.0% of those February gains since the middle of the month. Data out of the Euro-zone has indeed painted a good picture for the economy, but recent commentary from the European Central Bank have casted doubt over the ECB’s willingness to disrupt the current accommodative, low-interest environment.

There have been a few signs of low confidence in Germany and there is some instability related to Chancellor Angela Merkel’s negotiations in building a coalition, however, we see the Euro holding steady for the remainder of the month.

 

GBP

The Pound has dropped 2.4% of its value since the start of the month, mostly falling as a result of confusing everyday headlines on the Brexit front accompanied by poor data figures. Unemployment in the U.K. rose to 4.4% in Q4 of 2017, going up from 4.3%. Wages did improve, but the currency suffered because economic plans for Brexit seem to be revealing a tremendous vacuum in commercial presence down the line. Prime Minister Theresa May keeps meeting with EU lawmakers, but at home she faces too much opposition.

 

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