Faith in a trade deal adds risk-appetite, Buck down


Faith in a trade deal adds risk-appetite, Buck down

NOVEMBER 15, 2019

The U.S. Dollar erased some of its gains from this week as the week closes with positivity on the trade front after statements from a White House official.


Indeed, Larry Kudlow, Economic Adviser, said that talks with the Chinese are an ongoing daily thing now as they work on the “short strokes” and final details of an agreement. Everyone is crossing their fingers around the world and responding with some risk-taking, which naturally is causing the anti-buck rally.

Industrial Production and Retail Sales out this morning showed an ugly picture of contraction in the U.S. Sales only increased by 0.1%, but Industrial Production looked a bit European with a figure of (-0.8%) as half of that was expected. We shall see if any last-minute news causes further losses and if finally, there will be clarity on a trade deal.

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The Euro has improved after a week of mostly heading towards its worst level in over a month. The recovery is due to a better political climate, particularly in Spain where a government coalition has finally formed in hopes that laws can be passed, and budgets calculated. Additionally, inflation in the form of Consumer Price Index for the Euro-bloc remained at 0.7% average on the year. Germany avoided a technical recession and perhaps as trade makes progress the shared currency can get out of its weak spot.


The Mexican Peso rose significantly after the central bank, Banxico, decided to cut interest rates, but not as much as economists predicted. Reality is setting in that perhaps cutting rates cannot have that much impact and the Central Bank hinted at trade and lack of spending as factors affecting the lack of economic growth. The Federal Reserve seems to be also hitting the brakes on easing and Banxico seems to be following steps to slow down cuts.