U.S. Dollar returns as go-to asset in anemic globe

The U.S. Dollar is trading in mostly favorable ranges, with change in the direction due to the ongoing disappointment of economic data from Europe.

Overview

Uncertainty over trade keeps others down, but U.S. Trade Secretary Robert Lighthizer promised to have serious talks in China next week to bring the tariff impasse to a resolution. Oil prices are not surging with much momentum and this is weighing on the likes of Canadian Dollar and Mexican Peso already.

Productivity and Costs data were not released because of limits in surveying due to the government shutdown. State of the Union Address last night by President Donald Trump aimed at attempting to avoid further friction that could land the government in another shutdown soon if no agreement on a budget. Slow economic growth globally and some signs of instability on our end seem to be a recipe for greenback advancement since the good ol’ role of safe-haven has to be played by the one currency with the one economy still growing.

What to Watch Today…

  • • No major events scheduled for today.

EUR

The Euro fell as economic data remains the shared currency’s Achilles heel in 2019. This young year has revealed contractions in sectors where expansion was predicted such as Industrial Production, Manufacturing PMIs, and now the recently concerning German Factory Orders. Apparently a 0.3% was way out of reality with the actual reading registering at (-1.6%).

Italy is said to have now entered a technical recession with two quarters consecutively showing the economy shrinking, but if this is the trend with the largest regional economy in Germany, Euro depreciation will be the bloc’s least worry. Q1 will have to show a tremendous recovery because 2018’s Q4 seems like the dark ages. We still believe USD will run into trouble, but that scenario may materialize later.

GBP

The Pound fell further as Prime Minister Theresa May struggles to find enough concessions that could convince Parliament to approve a deal she negotiates. Currently, the U.K. leader is in Belfast to try appeasing those in Northern Ireland eager for a clear solution tom staying without a hard border.

She is later scheduled to be in Brussels, where supposedly some EU member leaders are more open to the idea of preventing a no-deal. Nevertheless, hardliners are still around with EU officials such as President Donald Tusk and Jean Claude Juncker who said the U.K. should not expect much more than what is already on paper.