Daily Market Update

Mixed feelings makes U.S. slight winner for the week

February 15, 2019

The U.S. Dollar is up by over half a percent this week primarily with the winds of risk-aversion taking over markets as economic data is painting a tough picture for the globe.

Overview

Chinese factory production has decelerated, Europe’s productivity seems to be in shambles, and Retail Sales contracting during Christmas for the U.S. yesterday were enough evidence that indeed a government shutdown can be extremely hurtful.

President Donald Trump is expected to sign a budget passed by the Senate, but while he intends to accept the bill, he is also potentially going to declare a state of emergency in order to get more federal funds towards a southern border wall. The repercussions of this are not clear, but any friction at the border will increase economic anxiety.

That could favor the greenback as a safe-haven or affect it negatively on something that could be perceived as an unstable situation domestically. At the time of writing, Industrial Production for January contracted (-0.6%), thus uplifting major counterparts against the buck. The University of Michigan Consumer Sentiment will be out at 10AM.

 

What to Watch Today…

  • University of Michigan 10AM

The complete economic calendar can be found here.

 

EUR

The Euro is very vulnerable and its weakness is due to plenty of turbulence in the larger Euro-bloc economies. Not only is Germany doing poorly growth-wise, but now Spain, which had been a steady overachiever in the past year, is now about to have general elections, again. The Spanish economy and employment prospects have surely improved, but separatists political movements and a lack of cohesion within parliament has created a government that cannot pass even the simplest of laws.

Prime Minister Pedro Sanchez had come in with a very weak alliance and now once more projects and other items in the legislative agenda will be delayed. It is certainly not great for a continent already worrying about political disunity.

GBP

The Pound is taking a break from its descent recently after Retail Sales in the U.K. grew by 1.2% in January, exceeding low estimates of 0.2%. Additionally, the prior number, which showed contraction of (-1.3%) in December, was upgraded to (-1.0%).

Meanwhile, on the awful political front, Prime minister Theresa May was once again rejected by the House of Commons when she gave a parliamentary address and presented her approach to solving Brexit prior to the deadline, now only 42 days to go. Without clarity on what deal would be acceptable, uncertainty over this messy divorce will keep Pound swinging.

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