Daily Market Update

Safe-havens pick up more steam, globe pessimistic

May 15, 2019

The U.S. Dollar is gaining against most major currencies with the exception of safe-haven Swiss Franc and Japanese Yen.

Overview

Markets are indeed worried about trade dynamics with the U.S. prepared to add duties to the remaining $300.0 billion of products from China that had not been touched yet. Furthermore, some talk of potential conflict has added to the turmoil and in times of doubt over armed intervention in the Middle East, naturally the buck will gain. Non-emergency personnel were asked to leave their Iraq posts by the U.S. State Department. 

On the economic docket, we had Retail Sales and Industrial Production revealed contraction falling by (-0.2%) and (-0.5%) respectively. Sales were predicted to rise by 0.4% and things were predicted to go flat in productivity. Only the Empire State Manufacturing gauge showed a better-than-expected reading by coming in over double the estimate. Thus far the buck is in favorable ranges and could see some swings, but no clear FX guidance at the moment. The development in Iraq is one to closely monitor.

 

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

 

EUR

The Euro is tumbling a bit despite data in the form of Gross Domestic Product coming in just as expected. The bloc is on a quarterly pace of 0.4% and annual of 1.2%. In fact, detailed German figures and inflationary growth in France all grew as forecast, but Italy seems to be the problem child once more.

Industrial Orders contracted again this month in Italy and now fears over the fiscal situation have resurfaced. This is manifesting itself with Italian 2-year bonds yield reaching the highest levels since last quarter of 2018. A risky EU player is not what the Euro-zone needs right now as it seeks form consistency that can propel the continent’s overall economy.

GBP

The Pound is down naturally as politicians in the U.K. scramble to find a viable strategy. Prime Minister Theresa May defended her Tory party members, saying that it is not Farage’s Brexit party who can deliver on the referendum, but that by June she hopes to have a deal. Her gamble is now this: since EU elections are coming and as we said yesterday that it looks like the Tories will lose big time, she believes the party will see need to gather around her plan to save face and actually deliver on Leaving. 

Thus far, everyone is starting to bicker about the concept of launching a second referendum, which Brexit Secretary Steve Barclay said was simply government opposition trying to revoke the people’s choice. Things sure look amicable.

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