The U.S. Dollar is under pressure this morning following positive signs overnight for global returns as China’s economic data points at ongoing expansion.
China’s Industrial Production growth had been estimated to climb by 5.1% but came in at 5.6%. The accelerated pace of growth is particularly impressive as the country has faced COVID fallout as well as pressure on trade from both the European Union as well as the U.S. In turn, equity markets have rejoiced with exchanges all in the green.
Overall, the buck is already entering the week flailing as it is almost down by 1.0% just in the past 24 hours according to the Bloomberg Dollar Spot Index.
We must point out that the International Energy Agency made statements playing demand down the line, so we shall see if this crushes the WTI prices or if OPEC+ and producers can maneuver, cut production, and increase the price. We will keep a closer eye on the Canadian Dollar and Mexican Peso this week after the news since both petro-currencies have been appreciating lately, especially Peso by over 4.0% in the past week alone.
What to Watch Today…
- No major events scheduled for today
Complete Economic Calendar can be found here.
The Euro is up on economic optimism and risk-appetite growing from the evidence of recovery in August. ZEW Confidence in Expectations Survey in Germany came in at a much stronger reading than expected, indicating that the fall and winter are going to be productive months. Italian bonds have been rallying and comments from ECB officials regarding no concern over a strong Euro have made it more attractive to enter Euro-denominated markets. We will get a glimpse at inflationary growth, key to ECB policy, on Thursday in the form of Consumer Price Index.
The Pound is attempting a comeback, which likely will be short-lived as it is only being fueled by the progress China made that creates risk-appetite. Other than that, Brexit issues remain alive and well as Parliament continues to pass votes that would make the External Market proposal by the U.K. official policy over EU Brexit negotiations. The Europeans have made it incredibly clear that this could affect in a very negative way for decades to come. Proposing to disobey the Withdrawal Agreement also goes against the process after invoking Article 50 to leave the Union.