The U.S. Dollar continues its return to gains as this morning major peers dwindled with optimism growing that the U.S. could perhaps mount a comeback especially if data helps.
Regardless of the safe-haven status, it can play in times of market doubts, the buck is rising in tandem with global equities, encouraged by news that a vaccine could indeed be ready for distribution by Nov. 1st. One thing to watch out for in the progress in the fight against COVID-19 is how people behave in the upcoming Labor Day weekend.
Furthermore, Initial Jobless Claims or the last week of August came in at 881K, less than the 950K expected and fewer than one million only for the second time since March. We could see further fuel for risk-appetite at 10 AM after we get a look at August Markit Composite Purchasing Managers Index.
We will also keep an eye on anything related to China as the White House is said to be reviewing its policies on Tik-Tok and the world’s second-largest economy is trying to become independent in the manufacturing of semiconductors and its components. According to a recent survey by CivicScience, about 65.0% of adults questioned said that they are somewhat concerned with tariffs and the “trade war,” less than the other months prior and a sign that business is flowing in spite of disagreements over Phase I of the trade pact. We shall see how this all plays out and if in the buck’s favor.
What to Watch Today…
- No major events scheduled for today
Complete Economic Calendar can be found here.
The Euro is losing on the basis of discouragement from European Central Bank members who feel an expensive currency may bode poorly for the pace of an economic recovery. A note from the ECB headlined by Chief Economist Philip Lane, highlighted that several officials saw EUR-appreciation as a dent to exports and price growth.
In France, President Emmanuel Macron announced further fiscal help, and in Germany Chancellor Angela Merkel backed plans for expenditures next year that will sustain a deficit. On the Brexit front, developments, or lack thereof, may be starting to negatively impact the Euro-zone’s economy after EU Chief Negotiator Michel Barnier sounded his most pessimistic yet, simply saying “I am disappointed,” in how U.K. counterparts have been with talks going nowhere.
The Pound is down as once again the concerns over Brexit must take over any other item related to the future of the U.K. economy without a clear and solid trade partnership with its neighbors. Barnier is the main player in these market moves as he revealed that the U.K. had not engaged constructively” at the table.
Per the reports, Barnier was frustrated that the U.K. kept trying to use their fishing as a negotiating chip and that there was no will or interest in building progress in other areas related to commercial trade. Sadly, we have seen this coming and the end of the year is going to be hectic and perhaps cause political havoc as British business leaders put pressure on the government. Pound is likely to crash from these multi-month highs.