The U.S. Dollar is trading in positive ranges, remaining in the positive upward trend that has been common all week.
Optimism behind the economy continues to advance the greenback as indicators serve as further evidence of its stability.
Personal Income increased by 0.4%, beating expectations, while Personal Spending and the Personal Consumption Expenditures measure all came in as estimated. If there was doubt that labor markets are strong, it shall dissipate quickly since Initial Jobless Claims are now at their lowest level since 1969, so people are finding work, theoretically.
Jerome Powell, the new head of the Fed, will continue to speak to congress today after he moved markets with his statements on a confident interest rate outlook and consistent trajectory of economic growth. Manufacturing and construction gauges will be released at 9:45 and 10AM in the form of ISM Manufacturing, Markit PMI, and Construction Spending.
The Euro’s negative week continues as measures of economic strength have underwhelmed. Consumer Price Index for the Euro-zone as a whole stayed on course at the low 1.2% pace, but the French CPI lagged the most. Markit Purchasing Managers Indexes in Italy and Greece failed to impress by expanding less than thought, however Spain was the saving grace.
The economy of the continent is not unstable, but there are signs of slower momentum than what we experienced in 2017. Additionally, the Brexit and the uncertainties behind it are starting to also get into the heads of Euro traders who must account for potential political headwinds in Italy and even the Czech Republic. Elections in Italy this weekend may set course for further losses to the Euro if anti-establishment parties take plenty of seats. In the Czech Republic, there has been some flirtation with a vote similar to Brexit.
The Pound is on the course that it deserves to be on after the calamity that has been these attempts to get a clear picture of where Brexit is going. The European Union published a 119-page draft on what the Brexit agreement would be and U.K. Prime Minister Theresa May did not hesitate in attacking its points right away.
However, Michel Barnier, the chief EU negotiator, stated that this simply puts on paper what had been agreed on during the first round of talks last year and this would make path for the second part that deals with the Ireland-Northern Ireland border and commercial ties.
Since there is domestic infighting that risks kicking May out of power, Britain is looking relatively weak and naive in these talks. Furthermore, calls for May’s ouster are only increasing, which confuses the EU because they wonder if the U.K. will change its stance and the staff working on negotiations.