U.S. Dollar falls as stocks go up on trade progress

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U.S. Dollar falls as stocks go up on trade progress

SEPTEMBER 24, 2019

The U.S. Dollar’s rise came to a halt following a surge in global stock markets caused by optimistic news on the trade front.

Overview

Indeed, U.S. Treasury Secretary Steve Mnuchin confirmed that China’s Vice Premier Liu He will be visiting Washington in the next few weeks. Additionally, China was reportedly given waivers to purchase soy tariff-free from the U.S., a major agricultural breakthrough. With such positive momentum, it is possible for greenback strengthening to take a backseat as news out of Britain also produced some negativity for the buck.

The U.K. Supreme Court delivered its decision this morning and asked that Parliament return to work tomorrow. While the Prime Minister did not agree, he said he respected the court’s ruling, and this means that Brexit coming without a deal could be more unlikely. Trade dynamics welcome the news and perhaps this will cut into some of the recent appreciation for the buck as it fades on its safe-haven status.

What to Watch Today…

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AUD

The “Aussie” Dollar along with its neighbor “Kiwi” rose as part of a global comeback for commodity-based currencies. It may be as short-lived as last week’s boost, but this time the trade situation with China is looking like serious progress made. Recent global propensity to exercise monetary easing and lower interest rates may continue but doubts over the escalation of the trade war could start going away for good. While details and an actual agreement are yet to be signed between the two countries, the mood between China and the U.S. is better and perhaps the friendly tone can translate into a more secure outlook for global growth without trade barriers.

GBP

The Pound is rising slowly to the news, but certainly its prospects for growth are up after the U.K. Supreme court found it unlawful for Prime Minister Boris Johnson to have suspended Parliament in order to pursue his Brexit agenda. It is possible that tomorrow will be filled with calls for a no-confidence vote, snap elections, as well as a second referendum on the question to Leave or Remain a member of the European Union.

For months and years, we have explained that economically this would not be good for the country, but politically the battle has been more heated as Tory party conservatives who want to leave are associating themselves with the Brexit Party and others are formulating how to build enough of a coalition to just cancel the Brexit process without even seeking a deal or referendum. The Pound will continue its vulnerable run, but tomorrow will be key in understanding the whole country’s direction.

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