The U.S. Dollar is mostly quiet with the exception of once again gaining against British Pound as fears mount over the U.K.’s ability to withstand leaving the European Union with or without a deal.
European markets are in a gloomy mood this morning and Asian stocks went flat after some comments via Twitter from President Donald Trump dampened hopes of a revival in optimism over China-U.S. trade talks. The President believes China has not followed through with pledges to increase purchases of agricultural products and other promises.
Personal Income and Personal Spending met expectations, but also means they came in lower than the month prior, a sign that consumption might be slowing. The Personal Consumer Expenditures (PCE) deflator came in at just 0.1%, indicating inflation is also kind of stuck. This data certainly confirms that the Fed can use it as evidence to cut rates, which we believe it can weaken the buck. Big Fed day is tomorrow.
What to Watch Today…
- Pending Home Sales 10AM
Complete Economic Calendar can be found here.
The Euro remains a bit of a straggler, but it is trying to find its legs behind some mixed economic numbers that came for France, Germany, and the EU as a whole. In France, Gross Domestic Product failed to meet the 0.3% expansion coming in at 0.2%, but at least there was growth in the second quarter.
German inflation went up higher than expected, while Economic confidence in the bloc came in better than estimated. Clearly, nothing is stellar, but if those two giant member nations can dig themselves out of their holes and the Fed moves to cut interest rates, the shared currency may benefit and perhaps rally back to levels seen in June.
The Pound has hit a new low against the dollar, its weakest value since March of 2017. New Prime Minister Boris Johnson seemed to suggest that there could be a chance the U.K. does not hold any talks with the EU prior to the October 31st deadline. On the other side, President of the EU Commission, Jean-Claude Juncker, warned that the current deal is the best and only deal for a less-hectic Brexit.
Naturally, Sterling speculators are feeling no confidence in the currency. To add to domestic instability, a Scottish official welcomed Johnson as “the last Prime Minister of the United Kingdom,” hinting at Scottish disillusion over a “no-deal” Brexit that could spark interest in seeking independence from the U.K.