U.S. Dollar closes week reversing most losses

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U.S. Dollar closes week reversing most losses

JANUARY 17, 2020

The U.S. Dollar picked up steam overnight against some of its major peers while staying steady against emerging and commodity-based currencies. 

Overview

Poor data in the larger economic regions attracted attention to the buck as much as interest in growing stock markets that require more participation and dollar purchases. S&P 500, Dow Jones, and Nasdaq 100 Indexes are all pointing at hitting new records yet again.

Additionally, global markets could feel the positive contagion as China’s Gross Domestic Product revealed stabilization of the second-largest economy at 6.1% for the final quarter of 2019. Investment also experienced a rise for the first time since June. This all means China was able to navigate through the uncertainties of trade negotiations and has managed to make up in certain areas where commerce with the U.S. has stalled. Unfortunately for our forecast, we go into the holiday weekend with a stronger dollar than anticipated.

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

EUR

The Euro returned to its lower levels of the end of last week after failing to sustain any of the value gained throughout the last five days. Neither Lagarde’s questioning of the European Central Bank’s current policies nor data meeting expectations has allowed momentum to remain a part of the shared currency’s narrative.

November Construction Output overcame a contraction expanding 0.7%, Consumer Price Index for the region grew 0.3% in December as estimated, and elsewhere there were some signs of productivity trying to recover. None of these elements are bringing good luck to Euro prospects, but swings are common, and we expect and upward turn.

GBP

The Pound found reason once more to flounder as the economy keeps pointing at deterioration indicator after indicator. Retail Sales in December surprised by not expanding by the forecast 0.8% as it actually fell by as much. Indeed, the (-0.8%) figure is the first dip into negative territory since the end of 2018.

In general, it seems like consumption is facing some woes and business activity, as well as a long-term investment, have slowed down. This most certainly works with our new thinking regarding a worsening Sterling especially with doubts over how Brexit can still further affect stagnation.

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