Daily Market Update

U.S. Dollar tight, virus fears subside

February 06, 2020

The U.S. Dollar reversed some losses from early in the week as a resurgence in market optimism sees a flourish in the stock markets, but tight ranges for FX.

Overview

At the moment, all tickers are in green territory as efforts by China to both contain the virus and provide liquidity to alleviate economic concerns are convincing traders that the globe can overcome the virus threat. Additionally, China’s plans to curtail tariffs on $75-billion worth of goods next week are boosting market expectations.

Non-Farm Productivity in the U.S. failed to expand in Q4 as much as expected coming in at 1.4% instead of 1.6%. There was hope for a larger percentage with the holiday season and recovery from contraction in Q3. Jobless Claims came in just slightly less than expected. Expect tight flows until tomorrow when we get the Employment situation and income data that can gauge how 202 started with all data from January.

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

 

EUR

The Euro could not solidify its gains from the return to risk-appetite since economic indicators are once more affecting the outlook for growth. It is clear that global demand and manufacturing declines are serious factors holding back the German economy from growing as Factory Orders for December shocked with a (2.1%) contraction when it was estimated to expand by 0.6%.

This situation represents the biggest drop in a decade and gives major weight to the impact that 2019 had on the Euro-bloc’s largest economy. We continue the analysis of the major member nation economies tomorrow with Industrial Production and Sales indicators. They shall give further insight into the end of last year.

GBP

The Pound continues its weak run this week characterized by growing worry over how exactly the transition period will be handled by the U.K. The economy still faces some uncertainty even as some indicators tried to point at an upswing experienced since the general election. More importantly, the disposition by the U.K.’s Brexit team seems of defiance, an unwelcome return to gridlock over major issues that also was a theme a few years ago.

Comments from officials in the EU are primarily related to the need for a delay to the deadline in order to avoid a no-deal scenario. One key statement affecting Sterling’s value came from the European Central Bank Chairwoman Christine Lagarde who said there is a risk that Brexit could lead to a bottom on regulation. Alignment and equivalence are what EU members will work towards; we shall see if the Prime Minister’s squad cooperates.

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