China adds worry to U.S. farmers, Buck remains strong

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The U.S. Dollar is trading in familiar ranges as no clear path towards a solution to trade impasses is being set forth.

Overview

China is trying to show its economic might over-consumption of U.S. products by putting on halt purchases of soybeans, a major agricultural good exchanged, as well as toying with the idea of putting barriers to its rare-earth mineral market that put the country in such an advantage in raw material production. The effects could be significant, clearly negative, and only putting traders and investors further on edge.

On the economic data front, Gross Domestic Product was revised downward from its original Q1 reading of 3.2% to 3.1% while Personal Consumption advanced from 1.2% to 1.3%. The mixed, yet tight figures were accompanied by Core Personal Consumption Expenditures, the Fed’s preferred measure of inflation being down tom 1.0% when 1.3% advancement was expected. These numbers only help clarify that the U.S. economic situation is better than the globe’s and keeps the greenback on its high pedestal.

What to Watch Today…

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EUR

The Euro fell to its lowest level since the end of April, thus erasing any and all improvement the currency had made from favorable and somewhat steady economic data. Trade is not the only worry that is quieting Euro-bulls recently as Italy is now the main focus of the EU’s regulatory commission. Officially, a letter was sent to the Italian government that they are at the risk of being sanctioned because of breaking fiscal rules regarding their budget deficit limit.

Clearly, the EU wants to promote one model for government spending that does not meet the agenda of those in power in Rome, which only ring warning bells of similar disputes with Greece. However, Italy is the third largest economy of the bloc and a recession for them would mean deep trouble as a whole for the continent.

MXN

The Mexican Peso has lost over 2.0% of its value since mid-April, primarily due to weakening of global markets in the midst of trade turmoil and low-growth concerns. Naturally, the problems surrounding the stability of oil prices have not been of much help with WTI Crude below $60.0 per barrel, having fallen over 12.0% since the last weeks of last month.

Nevertheless, there is hope for MXN to revive if AMLO, the president, follows his counterpart in Canada and pushed to ratify the USMCA (NAFTA 2.0) so that the trade agreement can go into effect along with its economic benefits. At least Banxico officials, the central bank, believe there is not going to be a recession per comment tomorrow.

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