The U.S. Dollar is strengthening against its counterparts based on good economic data in the form of Retail Sales and developments abroad that cause doubt over the political stability of a member of the European Union.
Overview
In June, Retail Sales grew by 0.4% beating the 0.2% estimate signifying a steady flow of consumption in the last few months in a sector that was hurting earlier. The move in the greenback’s favor could be temporary, but solid Industrial Production and Housing figures later could establish current gains. Industrial Production did not meet expectations of 0.1% coming in at at 0.0%.
It is worth noting that the Mexican Peso has been on a positive run and improved by as much as 1.4% in the last three days. Some of it has to do with hopes the economy will improve once the USMCA trade pact is passed and implemented, but also on recent packages by the government to help its oil production. The latest was aimed at Pemex, the petroleum company primarily in charge of Mexico’s oil production. Other commodity-based and emerging market currencies were on the rise until today. Per the MSCI Emerging Market Index, that basket has improved by 1.4% since mid-June.
What to Watch Today…
- Housing Market Index 10AM
EUR
The Euro has been on a 1.7% slide in the last two weeks and a half after making a comeback last week on the negativity exuded by the Federal Reserve Chairman in his testimony to the U.S. congress. As we have previously warned, Euro appreciation is often subdued and July thus far has been tumultuous. Although economic numbers have started to show some light of upward momentum, the politics remain an issue for securing fiscal spending domestically and preventing further friction in the pace of growth.
Spain’s Prime Minister Pedro Sanchez has not been able to govern as his Socialist Party has failed to reach an alliance with other parties in order to have a majority in parliament. Members of the governing body will be voting in a special session on July 23rd to figure out if his leadership is sustainable. Spain has been a consistent country in recovery, but spending disagreements and cultural/regional clashes in recent years have caused problems in central government cooperation.
GBP
Pound is now at its weakest spot since April of 2017, a fresh new low reached in recent weeks as a result of doubts over Brexit and other diplomatic items. Key inflation data and others in the next few days could further sink Sterling as we get ready to elect a new Prime Minister. Although the piles of negative items keep growing, one key reprieve for the country may be that wages grew at their fastest pace in eleven years.
