Daily Market Update

U.S. Dollar finishes week mounting a return

May 17, 2019

The U.S. Dollar is having a “Comeback Friday” as European and Asian equities dipped overnight on the prospect of more intense relations between the U.S. and China, while also a growing concern that Brexit could be mishandled and further delayed.

Overview

Additionally, European leaders are worried that Iraq might be fertile ground for a conflict with Iranian-backed militias as threats have pushed non-emergency personnel out, following similar steps taken by the U.S. A chaotic globe does tend to help the greenback and all today’s factors combined are no exception to this common trend.

Oil prices continued to improve, but it did not translate into helping currencies like Canadian Dollar nor Mexican Peso, which both fell by half a percent this morning. Hopes for “Loonie” strengthening will be placed on Retail Sales data that is expected to show consistent expansion for the past two months, which would be a contrast from an ugly streak of three months of contraction. It is worth noting that the Oceanic currencies of AUD and NZD are rapidly losing ground, with “Aussie” around its worst level in over ten years and “Kiwi” at its weakest point since last Halloween.

 

What to Watch Today…

  • Consumer Sentiment 10AM
Complete Economic Calendar can be found here.

 

EUR

The Euro seems to be reversing some its value, even as consistent data keeps coming out of the Euro-zone. The yearly average for Core Consumer Price Index reached a final reading of 1.3% for April beating its original 1.2% pace. The monthly average remained at 0.7% as estimated, thus healthy signs that inflation is headed where economists and the European Central Bank want: up. 

It is possible that trade issues that plagued equities also mixed in with a contraction in Construction Output, (-0.3) in April versus 3.0% in March, are what dealt a blow to the shared currency. As we have stated before, we believe in further Euro appreciation, but it will take stellar data accompanied by trade-friendly headlines.

GBP

The Pound is now barely 1.0% or so away from its weakest level of 2019 as the Brexit news do not get any better and now the near-to-long-term leadership of the country is a bit up in the air.Labour Party Jeremy Corbyn walked out of cross-party Brexit deal negotiations while the “1922 Committee” meeting between Conservative Tories and current Prime Minister Theresa May resulted in a timetable for her departure. She has until the beginning of June to pass her deal, but regardless of the result, another meeting with Tories will be set to determine her last day holding office.

No exact plans and lack of detail only keep hurting the forecasts for British businesses, which have already experienced billions of Sterling across various industries from banking to animal skins. Things are not looking too bright for Britain at the moment.

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