The U.S. Dollar is stronger against its safe-haven counterparts, the Japanese Yen and Swiss Franc, but losing ground to the commodity-based currencies such as Australian Dollar and the Mexican Peso.
Quite an eventful week is closing with the buck weaker overall by 0.8% according to the Bloomberg Dollar Spot Index. Indeed, positive news on the China-U.S. trade front rallied global markets and now the dollar’s value has been compromised since it is also expected that the Fed will cut once again.
Today, Jerome Powell could clarify guidance a bit at a speech in Zurich at 12:30PM. Recent days have seen voting members of the Fed show disagreement in what to do, so we do not foresee a unanimous decision and perhaps hesitation could lead to the FOMC holding off until September to cut.
The Employment Situation this morning revealed a lower number than expected at 130K instead of the expected 160K. The Unemployment Rate came in at 3.7% as estimated and Average Hourly Earnings improved slightly higher at 0.4% over 0.3% in August. Seems like mixed data that will ultimately not have as much impact as words from the Fed Chairman ahead of the September 18th meeting.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
The Euro surged by over half a percent thus far this week, looking perhaps to close even higher as Friday progresses. Gross Domestic Product figures for the Euro-bloc showed a gain 0f 0.2% in the second quarter as expected while the yearly average increased from 1.1% to a 1.2% pace. Some economists in the last few months have mentioned that European demand was never compromised, but that these figures are only as low as they are because of a decay in global demand based on trade concerns and tariff readjustments.
One major factor to account for European growth dragging can be explained with decreasing Industrial Production in Germany where a 0.4% expansion did not materialize as forecast. Instead, the figure revealed further contraction. While things in Italy have improved politically and the ECB seems uninterested in putting together a stimulus package, Euro may not truly flourish until economic data from the bigger member nations indicate progress.
The Pound is looking at its best levels since July 26th, rising this week by over 1.3% against the buck as worries over a no-deal scenario have rightfully started to fade. While Parliamentary members figure out when to call for a general election, it has become clear that the government as it stands cannot get anything accomplished especially since Prime Minister Boris Johnson does no longer count with a majority.
Leadership from all sides are figuring out their next step and strategy, but do not expect this to be an easy ride to an election as likely protests will come demanding a second referendum and the new Brexit Party by Nigel Farage could play a bigger role in campaigning as well.