Daily Market Update

Mixed Buck ahead of GDP Thursday

March 26, 2019

The U.S. Dollar is weaker against some commodity-based currencies such as Australian Dollar and Mexican Peso, while staying flat against most counterparts having gained in recent days from economic concerns growing globally.

Overview

Surprisingly, stocks are up and commodities are rising, although the MSCI ACWI Commodity Producers Index, which encompasses growth in the energy, metal, and agriculture sectors, started dropping from its strongest point since October.

Mixed feelings from Federal Reserve officials may have kept the buck from truly flourishing as Chicago Fed President Charles Evans said easing would be appropriate if forecast had to be downgraded further while Philadelphia counterpart Patrick Harker said he still saw chances for once more hike to interest rates. We do not think Powell will change his mind and the Fed will likely be cautious and quiet this year. That said, I must point out that odds for a rate cut by December now stand at 65.7%. Greenback will feel some pressure.

 

What to Watch Today…

  • Consumer Confidence 10AM ET
  • Richmond Fed Mfg. Index 10AM ET

Complete Economic Calendar can be found here.

 

EUR

The Euro fell once more based on evidence that economic performance in the bloc truly was anemic in the fourth quarter. Economic indicators out of Germany and France in the form of Consumer and Manufacturing Confidence revealed less optimism than expected, while Gross Domestic Product for France in the final Q4 reading showed an expansion of just 0.3%.

A slew of data on the continent’s well-being is coming in the next few days, but Friday will be most important as French CPI and German Retail Sales are released. If German Sales show an expansion, it would be a surprise since contraction is expected, but a welcome one for the currency’s prospects of resurgence. Euro can only change course if data improves.

GBP

The Pound is swinging upward now that many feel Prime Minister Theresa May’s power over the course of Brexit is out of her hands. Parliament sent a message yesterday as they voted and passed an amendment that gave themselves authority to choose what deal they want, which will set a series of votes on all kinds of items tomorrow.

Forcing the vote on alternatives may lead to Parliament choosing to delay further or call for a referendum date. The possibilities are endless, but most market participants feel the U.K. will leave with something and a “no-deal” scenario will be avoided. Over five million people have signed a petition nationwide to reverse Brexit. It was only a million a week ago.

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