U.S. Dollar up by 1.0% in February, reversing January

The U.S. Dollar is now experiencing its best run since 2017 as this year is now looking like a rally after seventh consecutive sessions of appreciating against its counterparts.

Overview

Euro, Pound, and other majors have dwindled and are stuck in downward trends within half-percent ranges. Commodity and emerging-market currencies, particularly in Asia and Eastern Europe are also going down in the face of doubts over trade and the need for central banks to downgrade outlooks, which may merit later intervention. All of this is a combo for greenback advancement.

Economists agree that there is a slowdown in activity and production, but many are coming out pointing at trade uncertainty as the main driver of current behavior and hesitant environment. A stagnant world only benefits the buck in the long-term, so to see a turnaround the issues bogging down global optimism must start getting resolved. A closer look into Gross Domestic Production on the other side of the Atlantic will give us more perspective next week as any surprise in outdoing estimates will boost other currencies across the board.

What to Watch Today…

  • • No major events scheduled for today.

EUR

The Euro declined by 1.4% thus far this month, a sign that the currency will be subject to heavy swings in 2019. While some feel the Eurozone can overcome the 2018 Q4 figures that displayed mostly contraction in production, most economists are concerned that tariffs and barriers to trade are starting to show they can take quite a toll for the region.

Additionally, there are new worries about Italy’s ability to even grow enough this year to merit the EU’s acceptance of a higher budget deficit than originally permitted. A 0.2% prediction for Italian GDP could still be outdone and of course we are of the belief that if expectations can be beat, the shared currency will benefit.

GBP

The Pound is sliding in February unlike the previous month that saw it climb by almost 4.0%. Perhaps things could turn around a bit. Prime Minister Theresa May went to Brussels, where apparently the air was a bit friendlier this time in discussing new concessions and revisiting the concept of avoiding a hard border between Ireland and Northern Ireland in the future.

The Bank of England also seemed to want to improve the outlook for the U.K. with Governor Mark Carney stating that Brexit was really the only downer for the Bank as wages are improving and the economy has not run into contractions, unlike EU members recently. Overall the separation and anxieties associated with it are keeping businesses on edge, but Sterling could maintain a path towards higher value as things gradually get resolved or a second referendum is proposed.