Greenback Stable, Most Majors Weakened

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Greenback Stable, Most Majors Weakened

FEBRUARY 10, 2020

The U.S. Dollar kept most its gains from last week and is marching towards multi-month as well as multi-year highs against some of its peers.

Overview

As an example, the Australian Dollar is trading at its weakest point since March of 2009 while others from Euro to South African Rand are seeing their worst levels since last October. The Coronavirus preventing investment and steady expansionary indicators in the American economy are keeping the greenback buoyant.

No major data for today, but we do have an eventful week to look forward to. Tuesday sees the beginning of Fed Chairman Jerome Powell’s semi-annual testimony to Congress, Thursday feeds us inflationary data, and Friday we get a slew including retail Sales while some tariffs are lowered between China and the U.S. as part of the recent Phase One deal. Only a big return to risk-appetite this week can induce pain on a very resilient buck

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

EUR

he Euro is down to its weakest point in over four months and may continue to tease with a potential downfall as political developments put future plans at peril in Germany. Not only is the main economy of the bloc suffering from a deteriorating situation in manufacturing and growth, but now the steady leadership of Angela Merkel’s party coalition is facing its biggest challenge yet. Annegret Kramp-Karrenbauer, Merkel’s planned successor for the next general election, chose to resign as leader of the Christian Democratic Union.

Widely known as “AKK,” the hand-picked official that was to be the ongoing legacy of Merkel, suffered a humiliating loss as an eastern German CDU chapter chose to defy her orders and form an alliance with far-right Alternative for Germany to fill a leadership position. Anti-establishment parties are perceived as a threat to the sustainability of the EU as well as the common currency.  

MXN

The Mexican Peso has lost 1.1% of its value in just the past five days, mostly tracking along the negative trend for emerging markets in the midst of uncertainty over China’s virus control. While world leaders have praised China’s efforts and shown support, plenty of companies have stopped all activity with the country, establishing fears that the Q1 GDP growth pace figures from China could go to as low as 5.0% or worse.

Many countries have needed to add liquidity to aid markets and we shall see if Banxico, Mexico’s central bank, chooses to act on Thursday. The current rate of 7.25% could see a 25-basis point cut. This shall translate into a weaker Peso.

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