Daily Market Update

Safe-Haven Buck Returns With Negative China

January 22, 2019

The U.S. Dollar is once more gaining primarily as a safe-haven asset in the midst of major concern over the global growth outlook and the immediate slowdown woes in China.

Overview

Slow times in manufacturing and overall trade are hurting China’s typical image of an economy that has unstoppable levels of advancement. Reality is setting in as an assessment of high debt and complacency forced Chinese Premier Xi Jinping to call a sudden meeting with leaders to address what he sees as a national party worry to be solved right away.

Furthermore, news out of the Economic Forum in Davos, Switzerland paint a dark worldview in which CEOs and state leaders agree the globe is not as healthy as desired. To add to the voices of concern, the International Monetary Fund downgraded its global output to increase by 3.5%, bringing it down from 3.7%, which represented a downgrade in October. It seems like the ingredients are all there for the greenback to keep gaining as chaos sets in in the minds of global investors.

 

What to Watch Today…

  • Existing Home Sales 10AM

The complete economic calendar can be found here.

 

EUR

The Euro is down as economists worry that the continent may be headed towards recessionary symptoms. An outlook for the region’s growth in 2019 fell from forecasting a 1.0% jump to just 0.6% based on recent indicators suggesting the need for businesses to grow faster. Apparently lending has not been as expansive as officials and others had hoped. Davos is not helping in promoting a dose of optimism since the leaders that are present, France’s Macron not included, are mostly talking danger.

GBP

The Pound is on its way up as Prime Minister Theresa May’s “plan B” is discussed as a potential venue towards a soft Brexit solution. More importantly, markets are eager to see if chances of a reversal of the whole Brexit process can occur via a second referendum, a scenario that is now openly favored among business leaders.

Opposition party leader Jeremy Corbyn is trying to force May to delay the Brexit deadline. She might not put much of a fight to that and a postponement increases the chances that a referendum will be called for. After February 26th, if there is no deal, Parliament takes the reigns over how to proceed with Brexit and another vote seems like they would be meeting the people’s demands. Data-wise, Sterling gained as a November indicator revealed average weekly wages have grown at the fastest pace since 2008.

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