Big moment in U.S. & China relations may lower buck

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Big moment in U.S. & China relations may lower buck

JANUARY 15, 2020

The U.S. Dollar declined yesterday and may head towards negative territory as economic data disappointed and we expect the signing of a much-awaited trade agreement between China and the U.S.

Overview

Producer Price Index figures for December came in at 0.1% under the 0.2% estimate. The official ceremony will occur at 11:30 AM as Vice Premier Liu He and President Donald Trump look towards to finalize what has been an ongoing drama for the past two years. Not all barriers to trade will be taken away as even tariffs will remain in place until after the U.S. election.

A rally in markets could be short-lived as this event seems essentially priced-in. The buck could face some losses though as currencies that felt stuck and under pressure based on trade woes can take a breather. Some uncertainty is likely to affect investors as they resolve if Phase One is the step forward that businesses need to revamp long-term investment. We shall see what the announcement brings with it as questions are expected.

What to Watch Today…

  • U.S.-China Phase One Trade Deal Signing 11:30 AM

Complete Economic Calendar can be found here.

EUR

The Euro has climbed by 0.4% in the last seven days feeding off of negative numbers out of the U.S. as well as speculation of better global demand. Industrial Production in the Euro-zone expanded after contracting the month prior, but the pace is still too slow to celebrate. One good development came in the form of trade news as European Union trade chief Phil Hogan explained that the U.S., Europe, and Japan have made progress in talks to avoid the addition of tariffs in particular to automotive products. Any sign of less disruption to international commerce will be welcomed by the shared currency.

GBP

The Pound looks fragile as economic figures continue to underwhelm. This time inflation per Consumer Price Index revealed no price growth as the 0.2% expectation came in at 0.0%. Additionally, PPI also failed to expand at all. Currently, these inflationary levels are some of the lowest in three years, coinciding with the period since the Brexit referendum was held. At this moment, there is no concern over the British economy overheating and we expect to see the Bank of England intervene, which shall hurt the currency.

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