The U.S. Dollar gained less than half a percent this week against its main counterparts, according to the Bloomberg Dollar Spot Index.
Overview
An eventful week that should have, in theory, resulted in a weaker dollar, only established its status as a safe-haven amid too many developments as it pertains to trade as well as the potential for armed conflict in the Mid-East.
Indeed, the Fed did as it promised, although with hesitation, went ahead and cut the interest rate by 25-basis points, the effects are not negative as it seems other banks will just proceed with easing to accommodate. Will, they cut again in 2019? Odds of a reduction for the October 30th meeting stand at 41.3% while at 68.6% for the December 11th gathering. Tons of data next week could have some impact as we get ready to enter the 4th quarter.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
EUR
The shared currency cannot find definite direction despite positive news about spending across the Atlantic. Perhaps European Central Bank President Mario Draghi’s message is being heard because both the Netherlands and Germany’s legislative bodies are trying to add to their expenditures on their next budgets.
While the Dutch have abandoned some of their fiscal rigor already, Germany has refused to put its balanced accounts at risk and expand. Truth is infrastructure requires repair while also a push for climate energy alternatives is being put forward. While Spain looks too heavy campaigning ahead of an election in November and Italy pushes for reforms, let’s see if France and Germany can improve the economic outlook by acting with less fear.
GBP
The Pound Sterling held mostly steady this week and kept its gains as it looks like there is mounting pressure to get something accomplished before the Brexit deadline of October 31st rather than get to it without a deal in hand. As high courts look to answer legal questions over the parliament shutdown, European Union leaders and businesses are now hoping that Prime Minister Boris Johnson abides by new law to at the very least agree to a delay to the deadline date.
Already economic indicators are dropping with Retail Sales yesterday showing a contraction of (-0.2%) in August when none was expected. Sterling will keep rising slowly as it becomes clearer whether a delay or deal are achieved.
