Daily Market Update

Recovery Across the Board as Rise in Commodities Lowers the Greenback

May 22, 2018

The U.S. Dollar saw most of its gains erased against most currencies after news developments that improved the outlook for the Euro and market appetite that aided the advance of commodity-based currencies.

USD

As prices of commodities and equities rose, the greenback saw other currencies recover. This was the fourth straight day of advancement in the commodities market, which has benefited the Australian and New Zealand dollars greatly.

Without much in terms of statistics, we shall see where headlines lead and guide the flow of the buck. Italy remains a major point of focus as a government coalition is trying to establish its mandate and choose a Prime Minister, one that could also work with President Sergio Mattarella. Futures markets are in the green, indicating a bit of optimism as markets digest geopolitical developments and the fading of “trade war” negativity.

 

EUR

The Euro recovered after falling for days on concerns over Italy’s political situation. The two parties establishing order may not have an easy time setting their agenda of anti-EU policies with reports that President Sergio Mattarella will strongly vet and possibly reject the outsider candidate for Prime Minister that the coalition has put forward, Giuseppe Conte.

An inexperienced PM would only solidify growing fears on the EU side that the laws and agreements currently in place will not be respected. Plans from the two-party rule include even establishing the distribution of government-backed notes, “mini-BoTs,” that could be used as legal tender for goods and services, essentially jeopardizing the Euro within the country.

 

GBP

The Pound stayed in weak ranges following parliament hearing commentary from financial heads such as Chancellor of the Exchequer Philip Hammond and Bank of England Governor Mark Carney. According to an assessment by the monetary officials, Brexit has left British households GBP 900.00 poorer since the process started. Economic output has also missed the mark by 1.0% below where officials had forecast. Sterling will likely remain under pressure ahead of CPI figures tomorrow and GDP Friday.

 

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