Daily Market Update

Dollar Reveres Fortune; Rises After GDP

February 28, 2019

The U.S. Dollar was under modest pressure overnight and the risk sentiment was slightly negative after President Trump ended his summit with Kim Jong Un in Vietnam saying “sometimes you have to walk.”

Overview

The mood has brightened in early trading after a report showed fourth-quarter growth beat analysts’ expectations.  4th quarter GDP has finally been released after being delayed by the government shutdown.  The report showed the U.S. economy performed better than forecast in the last three months of the year.  Total GDP rose 2.6% in the quarter, beating estimates of 2.4%.  While positive and driving dollar gains this morning, the print is still significantly lower than the 3.4% growth experienced in Q3. Personal consumption registered at 2.8%, failing to meet estimates of 3.0%. Consumption is also lower than the 3.5% reading in Q3.

The Swedish krona was the biggest winner overnight, gaining nearly a percent against the U.S. dollar as a report showed Sweden’s economy expanded twice as fast as estimated in the fourth quarter.

 

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here

 

EUR

The Euro popped higher overnight and tested recent highs before giving up its gains after a strong US GDP print.  The common currency’s strength can likely be more attributed to dollar weakness following Jay Powell’s testimony rather than Euro strength.  German inflation data matched estimates, which will continue to pour cold water over expectations that the ECB could start a tightening cycle in the coming months.

Despite ebbs and flows, EUR/USD has traded within a one percent range over the past month.

JPY

The Japanese yen gained overnight due to its safe-haven status after President Trump’s summit with the North Korean leader ended abruptly without any progress made towards denuclearization.  The JPY extended its gains as poor Chinese manufacturing data has been seen as another warning sign of a slowing global economy.

The Japanese yen has reversed its gains in early trading and quickly sold-off following the release of strong growth numbers in the United States this morning.

 

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