Buck down after Phase One signed with some doubts

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Buck down after Phase One signed with some doubts

JANUARY 16, 2020

The U.S. Dollar is currently trending in weaker ranges, primarily the result of improvement to global markets as traders review the potential impact the signed Phase One trade deal can have.

Overview

Finally, the two largest economies figured out how to start revamping their terms of trading, although both sides said there is plenty of work left to do towards a comprehensive agreement. Agricultural purchase volumes by China are still questioned on their sustainability while and tariffs that were recently imposed still remain. Nevertheless, the tentative peace and cooperation is a welcome sign by investors who aim to keep seeing record highs across stock tickers.

Retail Sales numbers released earlier revealed better than expected expansion for December, 0.5% over the 0.4% estimate, but revisions for November had to be revised downward into negative territory (-0.2%) instead of the original flat reading. Thus far, the data is not affecting FX flows. We shall see if markets advance further and if headlines keep playing against the greenback.

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

EUR

The Euro did not have much major economic data other than German Consumer Price Index figures that came in as forecast at a 1.5% pace for December, but it has managed to climb. Christine Lagarde’s first ECB meeting and its insights were released in Minutes this morning indicating that officials are questioning the efficacy of current stimulus and policy guided towards loosening financial conditions.

While they agreed to stay the course, Lagarde said there is a need to monitor the side effected of these policies, which many believe no longer contribute to economic growth as theorized. Perhaps it is a sign that goes along with our forecasts for a less dovish ECB that gets away from negative interest rates as well as QE.

GBP

The Pound rose slightly despite speculation that the Bank of England is looking to aid economic anxiety by exercising some easing as well as plans for rate cuts later in 2020. Current chances of a reduction to the 0.75% benchmark rate at the January 30th meeting stand at 60.9%. We shall see if Retail Sales give more reason for this stance to come to fruition as November numbers shocked with a deep contraction of (-0.6).  Any talks of a disturbance in Brexit talks could actually start a decline for Sterling.

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