Daily Market Update

Poor Data in the U.S. puts pressure on greenback

February 14, 2019

The U.S. Dollar had gained overnight, but is now close to losing half a percent against its major counterparts after the release of very poor economic data.

Overview

Producer Price Index for January was expected to expand 0.1%, but actually contracted by that much.

Furthermore and perhaps more worrisome as evidence of what a shutdown can do, December’s Retail Sales contracted by (-1.2%), thus completely going against the estimated 0.1% expansion. It seems that for the moment the greenback is indeed being punished for domestic figures sliding significantly. However, we shall see how long this effect remains since other regions are not faring that much better either.

The Senate is expected to vote on a spending bill and the President is expected to sign it, though some worry about how he has not publicly committed to planning on it enthusiastically. This danger could also be seen as a dollar-negative because now Sales numbers show the damage to the economy can be significant when workers miss paychecks. Do not expect a rally against the buck, but the advancement is halted.

 

What to Watch Today…

  • No major events scheduled for today.

The complete economic calendar can be found here.

 

EUR

At the time of writing, the Euro is mounting a bit of a comeback after plummeting yesterday on terrible reports on Industrial Production falling to financial-crisis levels. Additionally, recent analysis points at how the periphery countries that were once the trouble-makers for the bloc are doing OK after recuperating, but it is the largest economies suffering downturns now that is dampening outlooks for any type of growth.

Germany avoided falling into a technical recession by not contracting, nor growing in Q4 with GDP at 0.0%; France is not united behind President Macron, Italy’s potential for growth after tough budget talks, and Spain might have to call snap general elections because the current legislative group cannot come to consensus on a budget bill. It is clear that stagnation may foster a recessionary environment if figures do not improve, but at least the GDP for the bloc came in at 0.2% as estimated.

GBP

The Pound sank further against the greenback overnight as traders seem convinced the economy is at risk after experiencing a Gross Domestic Product contraction in December. Meanwhile, Prime Minister Theresa May scrambles to get a deal together, but rumors are circling around that she plans to not show anything to Parliament until the very last day prior to the deadline so that hesitant Tory Brexiteer members have no choice, but accept her plan.

The never-ending political instability along with evidence that Brexit uncertainty is translating into contractionary figures plays poorly for Sterling, though it remains with big potential for gains down the line if progress or some major breakthrough take place. Brexit could mean major food and medicine delays and the deadline is less than 50 days away.

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