Oil prices fuel Petro-currencies, Pound sinks
MAY 16, 2019
The U.S. Dollar lost ground to petro-currencies overnight as oil prices surged based on a return to risk-appetite across global markets.
China and the U.S. are certainly keeping all world and business leaders on edge, but a reprieve came from the U.S. administration that it will not be placing tariffs on autos and parts from overseas, something that was going to be peculiarly difficult to stomach for Europe. For the most part, most greenback counterparts remained intact, but commodities and other assets are on much needed recovery.
This morning’s economic data showed that Initial Jobless Claims remain about the same, over 200K, but that Housing and Construction overall may be healthier than thought. Building Permits in April grew by 0.6% when only 0.1% was expected and the prior month’s figure was revised from contraction of (-0.2%) to a whopping 1.7%. We will continue to be at the mercy of headlines in order to see any FX flows, especially since solid economic indicators are being established on both sides of the Atlantic.
What to Watch Today…
- No major events scheduled for today.
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At the time of writing, Euro was improving slightly, only helping sustain some of the appreciation achieved based on the bloc’s economic recovery.As Gross Domestic Product revealed, the assessment of a weak continent in need of stimulus seems premature. The start of the year was brutal because of doubts about Italy and the rise of political parties questioning EU membership.
Now, those political uncertainties have not gone away, but the recent Spanish election showed that status quo leaders can still be successful in the midst of challenges from both extremes, especially those with nationalistic tendencies. Furthermore, economic prosperity is the key to maintaining the EU alive and perhaps a continuation of steady numbers will translate into significant rise in Euro value and the fading of concerns that the EU is not sustainable.
The Pound is looking sadder and sadder as traders see only more confusion and lack of clarity when it comes to Brexit, and frankly, the political well-being of the United Kingdom. Today, Prime Minister Theresa May is set to meet with the “1922 committee,” a gathering of Tory leadership, but not to celebrate.
Indeed, May is now facing incredible pressure to resign willingly, but now the party wants to have her agree to a deadline date for her quitting. The discussion is surely going to further divide her party and give fewer hopes of Tories being able to claim delivering Brexit. Sterling is at its weakest point in three months.