Daily Market Update

Mexican Peso returns, U.S. Dollar not dominant

June 10, 2019

The U.S. Dollar is trading in familiar ranges following a week of weakening based on the latest increase in the chance of interest rate cuts coming in the near future, 82.0% by the Federal Reserve’s July 31st meeting.

Overview

Over the weekend, trade concerns subsided a bit with the U.S. administration announcing that Mexico would not be getting hit with 5.0% tariffs on their products this week. Plans to add them have been suspended for now as Mexico officials get into talks about issues at the southern border. Naturally, the Mexican Peso surged and is now 3.2% away from its weakest point of next week during the impasse.

Data-wise we will not have much to chew until we get to Wednesday with inflation in the form of Consumer Price Index and a slew of production and sales figures on Friday. Less-than-expected economic indicators have held the greenback back lately, thus any signs of further stagnation could lead to further losses. Bloomberg Dollar Spot Index is hovering around its weakest level since mid-April.

 

What to Watch Today…

  • JOLTS 10AM

Complete Economic Calendar can be found here.

 

EUR

The Euro is trading slightly weaker than what it closed at last week; however, it is much improved and near its best point since March 20th. Indeed, last week’s European Central Bank meeting set the tone for Euro recovery as it seems that members in the committee want to maintain a careful approach and not immediately cut rates to spur faster economic growth. ECB President Mario Draghi will have the opportunity to expand further on his thoughts when he speaks at a conference on Wednesday.

The Italian economist will also need to worry about his home nation as Euro-bloc finance ministers meet in Luxembourg on Thursday to discuss what penalties to apply on the government for failing to meet requirements related to budget and spending. Euro may not be charged for a rocket launch quite yet until some fiscal items show improvement across the continent.

GBP

The Pound is set to lose further ground as the heated contest form Prime Minister continues. Boris Johnson, a key “Leave” campaigner and former Foreign Secretary, is favored to take over after Michael Gove, his main opponent and Environment Secretary, had to deal with revelations of illegal drug use in his past, certainly a point of disadvantage among Tory challengers.

Investors and traders are interpreting the political struggle as another dangerous sign of a risky “no-deal” scenario since Johnson wants to deliver Brexit at any cost. Expect Sterling to stay on the weakening side for the week.

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