Daily Market Update

Dollar Holds Ahead of Busy Week; Pound Jumps on Interest Rates

April 09, 2018

The U.S. dollar is in familiar ranges this morning as global markets look to return to green today.

USD

U.S. stock markets fell strongly on Friday over fears over a potential trade war with China and a poor Non-farm payrolls reading. But European and Asian equities have ticked higher overnight and U.S. stock futures point to a higher open. On the trade war front, we will be paying close attention to a speech scheduled for tomorrow by Chinese President Xi who is expected to deliver a strong warning about the consequences of a full trade war.

There is no major economic data slated for release this morning, but PPI and wholesale inventories are on deck for tomorrow. Consumer prices are set for Wednesday morning followed by the meeting minutes of the FOMC’s latest meeting in which they raised interest rates a quarter of a point. There is only a 28% chance that the Fed will lift rates again in May, but the odds for a June rate hike are near 80.0%.

Currency markets, in general, have not reacted heightened escalation in Syria. Reports of a chemical attack on rebels in Douma let to an attack on a Syrian airbase that Russia as blamed on Israel. The Russian ruble fell nearly 3.0%. We will be keeping a close eye on the developments and how they may affect safe-haven currencies.

 

EUR

The Euro found some support due to a weak dollar on Friday but closed the weak at the lower end of recent ranges against the greenback. The Euro is gaining in early trading despite some mixed data released in the Eurozone. German exports plunged unexpectedly in February, posting their largest monthly fall in over 24 months, The result led to a less than stellar trade balance for Europe’s largest economy. Analysts blamed the recent strength in the Euro for the fall in exports, with overseas consumers less likely to pick German goods due to the increased price.

 

GBP

The British pound continues to float higher, extending its advance from last week. Halifax released their House Price index which showed prices rose 1.5% in March, its biggest jump since August. The strong data is adding to anticipation that the Bank of England may raise interest rates as soon as May. OIS pricing shows an 89% chance the BoE will boost rates by 25 basis points, up from a 77% chance a month ago.

 

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