Daily Market Update

U.S. Dollar picks up steam on Mid-East trouble

September 16, 2019

The U.S. Dollar is trading in favorable ranges as the risk of conflict has increased with the attacks on Saudi Arabian oil supplies fields over the weekend.

Overview

Certainly, this new geopolitical development has rallied oil prices as well, but it has yet to benefit the Petro-currencies like MXN and CAD. Indeed, this news has turned the tables from last week as we are back on a risk-aversion mode across global markets, which is also helping the Japanese Yen and safe-havens.

Houthi rebels in Yemen, where a major civil war involving a variety of Middle-Eastern intervention, have claimed responsibility for the act. Any chances of escalation that could involve even U.S. action will keep market participants on the edge and while any trade-related news may be revealed, this adds an unforeseen element in the dynamics of commerce. Expect greenback flows to also take a cue from the Fed on Wednesday, but until then this strong value may continue.

 

What to Watch Today…

  • No major events scheduled for today.
Complete Economic Calendar can be found here.

 

EUR

While the shared currency experienced some gains last week, its momentum has hit the brakes after the wave of equity losses based on market concerns as well as doubts over the potential effects of the European Central Bank’s recent stimulus move. Economists are pointing out that monetary policy aid cannot foment economic growth when there are structural and productivity problems unresolved such as austerity and weak inflation.

Much like Japan, the continent seems to be lagging after years of easing policies that have resulted in anemic growth levels and deflationary pressures. The Euro is likely to face multiple tests as it closes the year, but we shall see if the U.S. Fed determination to help will return some value to the beleaguered currency.

GBP

The Pound is rising and over the weekend reached some its best levels since July based on speculation of what may come out of a meeting between Prime Minister Boris Johnson and EU Commission President Jean-Claude Juncker. In general, optimism about a Brexit deal has increased especially after last week’s announcement by Northern Irish Democratic Unionists who said they would accept the Irish-border backstop along with post-Brexit EU legislation.

While the endgame is nearing, many in the U.K. see the need for resolving this matter sooner rather than later after warnings from grocery supermarkets that food supplies could start becoming compromised in a serious way with Brexit uncertainty.

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