Daily Market Update

Dwindling U.S. Dollar as labor sector underwhelms

October 04, 2019

The U.S. Dollar is closing the week weakening against counterparts all across the board.

Overview

A revival of risk-appetite came last night as global markets prepare to price in further easing aid from central banks after this week’s revelation of slowdown signals. Today’s Employment Situation was no different from missed estimates in Non-Farm Payrolls and Average Hourly Earnings. This only emphasizes the need for seeking a way to avoid recessionary pressures, perhaps with improved situations in the trade front or a plan for massive spending.

We see the potential for the buck to further weaken since now there is a trend for negative or underwhelming data causing depreciation. In general, we feel the economy is indeed struggling to find a strong pace and with other regions going into deeper contractions instead of expanding could change FX dynamics as decision-makers readjust their positions. Maybe a strong dollar cannot last and the Fed’s determination to cut may play further against its value.

 

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

 

EUR

The Euro has found support this week, but indicators are pointing at trouble for the Euro-bloc economy. Overall, Purchasing Managers index Composite figures revealed that the region barely met a reading of expansion and Germany’s individual PMI contracted for the first time since 2013.

Political struggles aside, Spain’s growth also diminished and other countries like Portugal are under watch not to fall in contagion, especially after five consecutive years of success and smart budgeting. We shall see if Euro returns to its levels from the start of the year, which we believe is very possible as this may be the bottom.

GBP

The Pound is trying to find maintain its resurgence as Prime Minister Boris Johnson seems to be more willing to delay the Brexit deadline than ever before. Additionally, he believes that he can get the Irish backstop issue resolved by agreeing with the EU on a time limit for it. Ideally, there is no disruption between transport and commerce between Northern Ireland and Ireland down the line, but ultimately the U.K. wants N.I. to be under U.K. rules.

If Johnson works a magical deal that can be given the thumbs up by the EU and can pass through Parliament, he will ease fears of a spillover of damaged commerce that could be caused by a no-deal Brexit. Furthermore, the EU has said that they were prepared for a no-deal scenario but would be limited in preventing global damage from an isolated Britain.

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