Daily Market Update

Risk-Aversion Goes Away While U.S. Dollar Slips

March 06, 2018

The U.S. Dollar fell overnight as a result of a revival in risk-appetite across global markets.

USD

Although exchanges reacted with disappointment at the potential of a “trade war” because of the surprise bestowed upon markets that high tariffs would be coming, most investors seem confident in overall global activity. The buck declined in value by an average of half a percent against most counterparts.

Additionally, developments in North Korea in regards to diplomatic talks between the rogue nation and South Korea elated market participants as much as world leaders who see the move as hopeful and ideal for possible de-nuclearization or non-proliferation. The Bloomberg Dollar Spot Index fell to its weakest point since February 20th. Greenback rallies have been short-lived and we shall see if Factory Orders and Durable Goods Orders at 10AM can help in recovering some losses.

 

EUR

The Euro is trading at its best level in over two weeks following gains in the European stocks indexes and good sales figures. February Markit Retail PMI figures released for Germany, Italy, and France all showed an expansion higher than the month prior.

Furthermore, speculation is growing that while the European Central Bank may keep away from changing policy at their Thursday meeting, the Governing Council may bring up ways to start dismantling the quantitative easing program sooner rather than later. The potential for tightening will always be a driver of Euro strengthening this year.

 

AUD

The Australian Dollar and its neighbor the Kiwi climbed overnight as commodity as well as equity markets returned to good health on good news regarding the Koreas. Additionally, metals bounced back up, important resources that these Oceanic economies depend on.

Economic growth in Australia is expected to continue at a steady pace, said the Reserve Bank of Australia during its Tuesday meeting, but refused to increase interest rates. RBA officials highlighted the need for further wage growth.

Commodities rising also paved a comeback for Canadian Dollar and Mexican Peso as well, which had been hurt by the idea of new barriers to trade.

 

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