Dollar Mixed But Remains Strong Overall

The U.S. dollar was mixed overnight but overall held tight ranges and near its recent highs against a number of its rivals.

Overview

If the dollar can hold its modest gains from this week, it would represent the third straight weekly advance, according to the Bloomberg Dollar Spot Index.

President Trump again made his frustration with the Federal Reserve known. Trump said “I don’t like it” when asked about the central bank’s current rate-hiking cycle. The President pointed to what he sees as a lack of inflation as a reason to keep rates low. Inflation has maintained near the Federal Reserve’s goal of 2.0%.

Speaking of inflation, this morning’s economic docket showed that producer prices rose for the first time in three months. Excluding food and energy, core prices rose 0.2% month over month and are up 2.5% year over year.

EUR

The Euro is out of the spotlight this morning as trading remained in tight ranges overnight. The common currency remains near its weakest level since mid-August on continued Italian budget woes. We will keep an eye on any further clashes between Italy and the EU and that effect on Italian bond yields in the near future.

Data showed that French and industrial production advanced more than expected in August, allowing the Euro to stem some losses.

GBP

The British pound initially popped to its highest level in two weeks before giving back those gains following disappointing economic data. The sterling found earlier support on hopes that officials were nearing a compromise over Brexit. The Times reported that over 30 Labour Party members would defy their party leader in an attempt to prevent a “no-deal” Brexit.

The U.K. Trade Balance showed a wider-than-expected shortfall. August GDP was flat on the month, modestly hurting the sterling. But a breakdown of the print showed that GDP growth for the three months through August was the strongest expansion in a year and a half. However, the 0.7% increase is still fairly low.