Back at it: U.S. Dollar better as trade doubts return

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Back at it: U.S. Dollar better as trade doubts return

SEPTEMBER 23, 2019

The U.S. Dollar is starting the week with half a percent appreciation on average against most of its major counterparts resulting from trade pessimism returning as a scheduled meeting between Chinese and U.S. officials on trade has now been canceled.

Overview

On Friday, China’s delegation explained they were told by the U.S. negotiators not to come to U.S. farmland as was planned for the second week of October. President Donald Trump said that he does not want just a partial agreement, but a completed deal between the world’s two largest economies. The buck is gaining as other assets and decisions are held back.

We shall see how Purchasing Managers Indices perform at 9:45 AM with manufacturing and services both expected to show expansion. Consumer Confidence, Gross Domestic Product and Durable Goods Orders will all be released this week to close the third quarter. At 10:30 AM, we will get a decision from the U.K. Supreme Court on its Parliament ruling and whichever way that goes will certainly spark volatility across markets. We see the greenback as vulnerable and not really having a clear direction until some data is out.

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

EUR

The Euro is having difficulty keeping any gains as once again the dark clouds of poor economic data cover its horizon. Overall, the bloc’s PMI composite came in at the lowest reading in over six years. More concerning, Germany’s Manufacturing PMI came in at the worst contraction in a decade and some economists doubt the country will finish with positive productivity for what is left of this year.

Clearly, the largest economy having trouble stabilizing its situation is a concern, but European demand is better than what is going on at the global level and if worldwide growth picks up, the German figures will pick up steam.

GBP

The Pound could be due to some strengthening if indeed the Supreme Court establishes that Prime Minister Boris Johnson did not have the right to suspend Parliament and brings the legislators back in. Labour Party officials are eager to speak in front of other lawmakers and propose a second referendum on the Brexit question to somehow leave or just remain.

Opposition to Johnson is not just in the form of Labor Party, but also within his Conservative ranks and the Brexit Party created by Nigel Farage. The almost cartoonish nature of this political struggle will be the atmosphere for Pound up to October 31st.

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