The U.S. Dollar remains strong after posting its fifth straight week of gains for the first time since 2015.
Not only is the economic picture better in America in comparison to other regions at the moment, but the fear that had been plaguing markets concerning a potential “trade war” with China is going away. U.S. Treasury Secretary Steve Mnuchin announced that they were “putting the trade war on hold” as negotiations with China have made significant progress.
The truce helps the greenback, which may see further help to stay afloat this week from the Fed Minutes on Wednesday and indicators such as Durable Goods Orders on Friday. Other than that, the buck will be impacted by headlines from across the Atlantic regarding Brexit developments and political havoc on the periphery countries of the EU. At the time of writing, the dollar kept rising across the aboard with emerging-market currencies losing key support levels with uncertainty over energy costs and Iran.
The Euro continues to suffer around levels last seen five months ago as the careful situation in Italy foments doubt over political stability. A populist coalition has not eased concerns as current Italian President Sergio Matarella has proposed to appoint a new premier, Giuseppe Conte, an outsider who is a law professor at Florence University. The lack of clarity over what policies will be put forward and the anti-establishment sentiment are big worries for EU officials. Latest minutes from the European Central Bank meeting are due Thursday and could reveal deepening concern amongst financial heads as well.
The Pound is down to its worst levels in five months ahead of a decisive week for the U.K. which will see a slew of data that can prove the economic slowdown of 2018. Consumer Price Index will be out Wednesday while Gross Domestic Product for Q1 will be released Friday. We foresee, that along with issues related to Brexit talks that are well documented, the misfortunes of hard data will be evidence that indeed the Pound has been overpriced and the effects of Brexit uncertainty underestimated.