Daily Market Update

May closes with year’s best U.S. Dollar

May 31, 2019

The U.S. Dollar gained 1.0% in the month of May following a tumultuous month of trade conflict headlines that ultimately crowned the greenback as the strongest of the safe-havens.

Overview

Domestic stocks saw their first monthly loss since December and this coincides with the Bloomberg Dollar Spot Index, which happens to be at its strongest levels since that same period.

New developments regarding a potential added 5.0% tariff on Mexican goods that could be levied by the U.S. government to combat issues at the border is only adding further worry that barriers to trade are starting to mount as the globe struggles to accommodate.  Both Mexican Peso and Canadian Dollar were headed downward, MXN particularly rapidly, as it frustrates the goals of ratifying USMCA within those national governments. We do not expect much to change for the buck until these trade matters start looking solvable.

 

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

 

EUR

The Euro fell over half a percent against the buck in May, but the dip reached the lowest point for the shared currency in two years. Although there have been signs of economic recovery and many economists feel the continent’s expectations have been too gloomy, the Euro could not sustain any gains and the global downward spiral from trade headlines has kept stocks from sparking a boost to the currency’s value.

While Italy figures out how to spend its money while not breaking EU rules that could spark unnecessary tensions, the EU could be fresh ground for negotiation as analysts have pointed to the election of a diversity of political parties in parliamentary voting. Indeed, the established leaders have been warned that constituents want changes, want to see the benefits of membership, and a push towards modern infrastructure and innovation cohesively could be what stabilizes the economy and surges the Euro later this year.

GBP

Sterling declined 4.5% in value in May after a disastrous month that meant the end of Theresa May as Prime Minister, an EU parliament with filled Nigel Farage’s Brexit Party, and no solution to the trade question in sight as the government scrambles to get it all together prior to October. Years of negotiating a deal did not translate into delivering Brexit and now the Tory party is looking for someone to take the reins.

While the economy is not sinking, employers are facing tough long-term questions and yes, companies have moved shop elsewhere to still partake in the single market. We stick to the belief that a solution will send Pound skyrocketing, but we may not get serious action until September since often it is last minute swings that are exciting.

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