Daily Market Update

U.S. Dollar Loses For the Week in Highly Vulnerable Markets

March 23, 2018

The U.S. Dollar is trading in tight ranges after a rather eventful week that witnessed stock indexes drop on very high volatility.

USD

Political and economic headlines left the U.S. Dollar weaker by 1.0% as doubts grow over the economy’s ability to withstand trade issues, arising from a new take on policy towards Chinese products.

The world’s second largest economy, China, holds plenty of leverage and investors are manifesting their concerns as they predict turmoil. Instability in trade is always a dollar-negative development.

Durable Goods Orders released earlier this morning showed a much higher expansion than expected, almost making up for a deep (-3.5%) contraction in January. Surprisingly, February orders increased by 3.1% exceeding an estimate of 1.6%, which ultimately rounded out a week of overall good news on the domestic economic front. The buck is not seeing any benefits, but bad news on other regions could eventually make the greenback look more attractive later in the month. That is only if trade issues find resolution in the eyes of markets.

 

EUR

The Euro improved by over half a percent throughout the week, surviving hits to the Euro-zone’s economic performance and news of unstable relations with Russia. The European Union saw declines in PMI’s across the continent and some experts are already predicting the European Central Bank may have excuses to not tighten monetary policy as a result.

Additionally, Russia’s alleged attack in Britain using a nerve agent has caused a chain reaction in all nations that are considering even the ouster of Russian diplomats. Chancellor Angela Merkel called for deep unity as they confront Putin and Russian meddling. The uncertainty over foreign affairs may also keep Euro from seeing strong gains as we close March.

 

MXN

The Mexican Peso climbed by 1.6% this week following good news on the NAFTA front, an exception to bad news in the trade realm, as well as an auction of bonds by the central bank, Banxico. The Peso could have gained even further ground, but yesterday’s news of corruption allegations against the second most prominent presidential candidate over questionable real estate deals diminished MXN progress. The wild swings may continue for one of the most volatile currency pairs as NAFTA talks continue and scandals ensue ahead of the July 1st presidential vote.

 

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