The buck hits brakes as China seeks dialogue

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The buck hits brakes as China seeks dialogue

NOVEMBER 21, 2019

The U.S. Dollar retreated overnight as some hopeful sentiment renewed following positive statements from China’s top trade negotiator.

Overview

Liu He, who serves as Vice Premier in China, said he was “cautiously optimistic” about reaching at least a partial Phase One agreement. Additionally, he expressed his will to invite Robert Lighthizer, a main negotiator from the U.S. side, to go over to China to engage in further talks. As you can sense, the roller-coaster of unclarity continues. Today, it is not helping the buck.

We shall see if Existing Home Sales October numbers do anything when released at 10:00 AM, but the bigger impact shall come from the revision of Markit Purchasing Managers’ Indices from November due to come out tomorrow. Any lack of expansion in Manufacturing or Services could cause the greenback to depreciate.

What to Watch Today…

  • Existing Home Sales 10AM

Complete Economic Calendar can be found here.

EUR

The Euro returned to its better levels of the week after good news out of the European Union Commission, which has shown recent commitment to increase availability of funds as well as opined in favor of bigger budgets in the larger economies. This basically helps in the fight that member nation governments have engaged in over increasing the deficit limit, in order to allow a dip into debt, but help in doling money out.

Italy is sure to benefit as a new government tries to reduce bureaucratic obstacles and grandness to become more efficient. We continue to see positive signs for the shared currency that could indeed make it rise with an accelerated pace as the year ends.

MXN

The Mexican Peso is dwindling as the outlook for economic growth is looking dire, in particular for emerging economies that are now experiencing productivity concerns threatening potential recession. The pace of global growth, especially as measured in Gross Domestic Product, has been gradually been downwardly revised the entire 2019. As we look into 2020 and analyze the projections that did not materialize the last 11+months, we see a worrisome downturn as a result of investment and spending decision delays.

Loose credit, easing measures from central banks, and a new technological boom could mean another much better picture, but governments and businesses need to realign their plans of action and look for ways to expand and employ more. As of now, GDP is supposed to average 4.5% next year, well below historical averages.

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