The U.S. dollar is under renewed pressure this morning and the Bloomberg Dollar Spot Index fell to the lowest level in two weeks.
The dollar’s weakness can mostly be attributed to positive events abroad. Global equities are higher on hopes that China and the United States will step back from the brink of a trade war. China has reportedly offered to buy more American products to avoid stepper tariffs but news surrounding trade has been fluid and not long lasting so we will take it with a grain of salt.
The Australian dollar was the best performing G-10 currency overnight after the Bureau for Statistics said GDP rose 1.0% from the previous quarter, beating estimates of a 0.9% expansion. Yearly growth was 3.1%, also beating estimates of 2.8%.
Today’s economic docket is light with only Trade Balance crossing the wires. Looking forward, Japanese Prime Minister Shinzo Abe will be in Washington tomorrow to speak with the President about the planned U.S. summit with North Korea. The G7 Leaders’ Summit starts in Quebec this Friday and it is expected the U.S. will be take some chiding from other members on what they consider dangerous rhetoric on trade.
The Euro continued its positive momentum from yesterday’s session and added 0.5% of gains overnight. The Euro shot higher yesterday afternoon after European Central Bank chief economist Peter Praet, usually a dove, confirmed that next week’s policy meeting will likely be used for reaching a decision on when to end the bank’s quantitative easing program. The hawkish announcement comes amidst political turmoil in Italy and Spain and a backdrop of soft economic data. The common currency is now trading at a two-week best against its American counterpart. Eurozone GDP will cross the wires tomorrow morning.
The Sterling looked to add to yesterday’s gains overnight. The currency rose yesterday following reports of strong service PMI, the largest part of the U.K. economy. The sterling’s overnight momentum is being attributed to Brexit news. The U.K.’s main opposition party, the Labour Party, proposed a plan to effectively stay in the European Union’s single market. Labour Party leader Corbyn added an amendment to PM May’s Brexit legislation and will be voted on next week. However it should be noted as Bloomberg News reports “Labour can’t pass laws on its own and needs members of May’s governing Tory party who favor a softer version of Brexit to rebel against the premier and vote with the opposition.”
GBP/USD is at the highest level in two weeks.