The U.S. Dollar is trading in familiar ranges, swinging upward now as a result of doubts that the global economy will have much to cheer about this year as China downgraded its growth forecast.
Indeed, the very imperative annual National People’s Congress is revealing that the country is facing a slowdown that required the revision of Gross Domestic Product estimate from 6.5% to 6.0% plus the announcement of tax cuts to incentivize activity. A trade deal between China and the U.S. could be in the works, but investors are hoping recently established tariffs can be taken away soon.
Services Purchasing Managers’ Index, New Home Sales, and another non-manufacturing gauge will be released by 10AM. We are at the mercy of headlines since the impact of the data may not matter as market participants seek to hear solutions to various impasses. Bank of Canada tomorrow and the European Central Bank on Thursday will provide us fresh takes on the current economy and could certainly provide more guidance than today will on FX direction.
What to Watch Today…
- PMI Services 9:45AM
- New Home sales 10AM
- ISM Non-Mfg Index 10AM
Complete Economic Calendar can be found here.
The Euro is down ahead of what may be a key ECB meeting on Thursday. While the economy of the bloc has looked to weaken, there are officials advocating for optimism based on recent numbers in manufacturing and sales that provided some positive reprieve for the German as well as French economies.
Italy and Spain, respectively the third and fourth largest economies of the EU, are dragging a bit and are dealing with political gridlock Overall, there are factors keeping the Euro-zone from flourishing, but the global situation as a whole must look rosier if Europe is to see the type of prosperity that can uplift the Euro’s value and hold it.
The Pound is down almost a full 1.0% after overnight news on Brexit strategy added confusion and made the situation more obscure. There are talks of trying to defy the EU’s Irish-border back-stop using some treaty that apparently no one knows about. Apparently the British want to use a Vienna Convention 1969 treaty clause that allows a party to set the timeline on when to leave agreements.
The clarity on this is iffy, but Prime Minister Theresa May sent her attorney general to Brussels to see if this could help in preventing a border issue if Northern Ireland basically is part of the customs union while the rest of the U.K. would not be a member down the line. Sterling up-down moves will be aggressive as we reach the pivotal March 29th deadline.