Daily Market Update

Equities Turn Around, But U.S. Dollar Keeps Rising

February 12, 2019

The U.S. Dollar is maintaining its strong momentum as equities across the board got a reprieve on news that the U.S. government may avoid a government shutdown after all as well as developments in trade resolution talks with China.

Overview

Chinese Vice-Premier Liu He will be joined by Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer in Beijing on Thursday. The world’s second-largest economy is expected to work diligently as they face other challenges domestically and would like to put the trade questions to rest.

Without any data points today, we will look forward to a discussion featuring Fed Chairman Jerome Powell and see if any statements make waves. Indicator releases will come with inflation as Consumer Price Index tomorrow, Producer Price Index Thursday, and various other measures Friday that include Retail Sales. As of now, greenback strength cannot be denied and its advancement can be traced not only in safe-haven environments but also when risk-appetite re-emerges as a result of trade talks, a matter the U.S. is in control of guiding forward and other currencies are more sensitive to.

 

What to Watch Today…

  • No major events scheduled for today.

The complete economic calendar can be found here.

 

EUR

The Euro is at its weakest level in three months following further negative economic data that establishes the fact that the bloc’s big players in Germany, Italy, and France are suffering from more than just stagnation. As certain measures have fallen into negative territory, faith in the QE-free continent is fading. France and Italy are currently experiencing more friction than usual with Italian Deputy Prime Minister Matteo Salvini having an impasse with French President Emmanuel Macron over the former’s visit with France’s “yellow-jacket” protesters.

The alliance between the movements is an affront to Macron who is not only trying to defuse conflicts with labor unions, but also integrate the EU further. A clash of visions is happening in the Ancient Continent, but Euro for now seems like the loser.

GBP

The Pound lost ground naturally with news of a slowdown in Gross Domestic Product growth for Q4 of 2018. Today will be a very light day across the Atlantic as well since Prime Minister Theresa May is expected to just speak to Parliament and ask for their cooperation. She is asking for more time to negotiate with the EU since only last week EU Council President Donald Tusk agreed to send negotiators back to the table in Brussels.

Any new concessions or developments would be a surprise, but it would boost Pound. We do not see much of a solution that does not include a deal, but since a deal cannot be passed by Parliament; we think they will resolve to hand the people a chance at reversing Brexit.

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