Daily Market Update

Renewed Trade Uncertainty Halts Dollar

May 24, 2018

The U.S. Dollar fell about half a percent against its major counterparts following news of potential trade issues in relation to automobile imports to the United States.

USD

President Donald Trump spoke yesterday of tariffs on autos in the name of national security while also criticizing the structure under which Chinese terms of trade are being negotiated. Naturally, this overshadowed gains seen throughout the past two days. As a bit of reprieve, data out of the U.K. finally gave some positive perspective on the economy and Pound rose to recover.

Durable Goods Orders will be the main feature piece of analysis tomorrow as we close a week that saw the buck reach its best levels of the year and beyond. Something had to get in the way of the rally and the greenback was indeed pushed back a bit overnight. Equity markets are looking tom recover after a week of turbulence over trade uncertainty. Greenback may lose its touch as safe-haven for right now.

 

JPY

The Yen has recovered some of its recent losses, which had the typical safe-haven currency trading around its worst levels in six months. Recent days of doubt have directed investors to seek the Yen as the economy of Shinzo Abe’s land remains consistent and with a surplus.

Regardless of some domestic scandals involving allegations of graft and corruption, the Prime Minister has been able to take credit for stability as well as good diplomacy. We foresaw these levels and see swings towards further appreciation as global situations elsewhere look less desirable for taking bets. Japan is not going to be as shaky as Europe.

 

GBP

The Pound saw some light as Retail Sales for April improved much more than expected. The estimated 0.5% expansion turned out to be 1.3%, more than double, which indicates more activity because of better weather. Brexit’s cloud will continue hovering over the economic outlook, but the return to growth in sales and consumption is a positive that merits the slight uptick in Sterling value.

 

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