Return to risk-appetite, but buck holds steady

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Return to risk-appetite, but buck holds steady

FEBRUARY 11, 2020

The U.S. Dollar is trading in mostly strong yet choppy ranges as global equities are revived on faith that the coronavirus will not prevent China from making a comeback from the slowdown in economic activity.

Overview

Furthermore, China’s monetary injections into the financial system to ease nerves have served as an example for other countries to act in a similar fashion.

Ultimately, markets seem to want to refuse to see the virus and the fear of spread as too strong a detriment. China’s Premier Xi Jinping stated that it was possible the reaction to the illness has promoted more fear than necessary, thus threatening further hits to the pace of growth. In such a situation, the greenback has lost some of its value against resource-based currencies.

Fed Chairman Jerome Powell is scheduled to start giving testimony to the House Financial Services Committee at 9:50 AM, the first of a two-day discussion with the House and Senate over the state of the economy and Fed policy. With stocks at brand new record highs, the testimony will be a major risk event that could impact flows throughout the morning.

What to Watch Today…

  • Fed’s Jerome Powell and House Financial Services Committee 9:50 AM

Complete Economic Calendar can be found here.

EUR

The Euro is down to its weakest level since May 2017 with growing fears that the coronavirus with the current rate of productivity characterized by contractions can lead to a Q1Gross domestic Product fall into negative territory and potentially a recession. German politics and economics seem opaquer than ever and governments in Spain and Italy are barely holding together their alliances to simply govern.

Spain also just downgraded its growth outlook for the year from 2.0% to 1.6%, figuring struggles in trade will continue. We shall see if European Central Bank President Christine Lagarde has anything to propose as a solution when she speaks to the EU parliament in Strasbourg this morning. For now, not much is looking to help the shared currency.

GBP

Pound Sterling remains mostly subdued but stopped the bleeding as GDP data came in mostly falling in line with expectations. The monthly figure for December registered at 0.3% beating the 0.2% estimate, while the average for Q4 remained at 0.0%. However, Industrial Production came in anemic, less than forecast, and Manufacturing dug deeper into contraction at (-1.8%). Soon-to-depart Governor Mark Carney from the Bank of England will speak at 10:35 AM to discuss further the U.K. Economic Affairs Committee.

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