Daily Market Update

Dollar Weak Overnight Before Early Rally Friday

January 11, 2019

The U.S. Dollar is trading in mostly weak ranges to close the week, its worst one in about eleven months.

Overview

A tumultuous global economy is trying to find answers to problems of 2018 in order to have a clearer outlook on things, but thus far a government shutdown is trying to break records and there are no details on what China may concede in talks about trade with the U.S. yet.

Nevertheless, the globe is shooting for a rise in value as they hope for commodity prices to keep climbing. Per the MSCI Emerging Market Currency Index, currencies in that basket including Mexican Peso, Turkish Lira, Brazilian Real, and Indian Rupee are performing at their best level in six months.

After Consumer Price Index figures this morning of an expected 2.2% expansion in December, it is clear indicators are on the side of a consistent picture for the U.S. economy despite some issues. Nevertheless, this did not help the greenback considering the dovish tone set by Fed Chairman Powell and other officials who made it clear the central bank will be cautious before considering a rise in interest rates. The March hike that seemed once guaranteed only has a 3.3% chance of happening at the moment, unlikely to rise.

 

What to Watch Today…

  • No major events scheduled for today.

The complete economic calendar can be found here.

 

EUR

The Euro is still hovering around its strongest level in four months following fears of the U.S. situation getting worse. Chances of a recession for the EU in 2019 stood at around 18.0% a week ago while the odds of the unfortunate event occurring on our shores stood at 15.0%. This morning the latter gauge increased to now 25.0% as traders set bets on market downfall. Poor data recently and a rise in anti-establishment language from politicians in some countries on the periphery have failed to knock the Euro’s positive momentum, which at the moment makes sense since the December finalization of the quantitative easing program and resolution to Italy’s budget concerns.

GBP

The Pound reached its best level in six weeks after news that Parliament members from the U.K. Labour Party will support an extension in Article 50 invoking the separation from the U.K., although it is not clear if they will delay other items and if they can. What is a definite plan of Labour is to call for a general election of members and do what is needed to force May to quit once her Deal proposals fail.

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