The U.S. Dollar stuck to its winning ways over the weekend as it rallied for an eighth consecutive session.
Indeed, this is the best ongoing streak since 2017, mostly a result of growing doubts over global economic growth, the possibility of another government shutdown in the U.S., and trade uncertainty. As an example, the National Federation of Independent Business (NFIB) Small business Optimism Index fell in January as it has for five months straight. It is hard for activity to flourish in the midst of unresolved matters.
Per the Bloomberg Dollar Spot Index, the buck is at its best level since the year began. With emerging-markets eager to see solutions to Venezuela and other commodity-related developments, expect the greenback to stay robust as a safe-haven. A heavy slew of data will be released for the U.S. starting Wednesday with Inflationary growth in the form of Consumer Price Index.
What to Watch Today…
- No major events scheduled for today.
The complete economic calendar can be found here.
The Euro is down to its weakest level since mid-November based on a slowdown across the region, renewed concerns over Italy’s ability to grow this year, and loss of faith among investors that the central bank can let the economy run on its own without aid. We think the shared currency is subject to scrutiny in the next few months as many sectors need to show recovery, certainly not contract any further. Industrial Production in Italy is suffering more than analysts expected, which could mean further downgrade to the bloc’s growth outlook.
The Pound is down and likely will face a hard time resurging since the drop is based on a dent to fundamental economic data. Gross Domestic Product figures revealed a contraction in December that brought the Q4 average down to 0.2% instead of the estimated 0.3%. The yearly average now stands below the previous 1.5% at now 1.3%.
We have mentioned and made note of how fundamental indicators had not yet shown signs of contraction, but with December failing to impress and actually disappointing, Sterling may be in deep trouble in the next month or so especially if no real progress is made in clarifying where Brexit is headed. Our forecast for appreciation may take a hit in Q1 if other data points also falter in a major way. We foresaw swings in the fluctuation; this is the first one down for Pound and is a serious one.