U.S. Dollar mostly up, but Kiwi rises on the central bank
NOVEMBER 13, 2019
The U.S. Dollar is looking slightly stronger across the board with a few exceptions in New Zealand Dollar and Japanese Yen.
The latter has benefited from the red ink all over global stocks as pessimism seems to be the mood for the time being. Yesterday’s speech by President Donald Trump at the Economic Club of New York reminded investors that a deal on trade is still not a guarantee and that the Federal Reserve is not satisfying the administration as more cuts are desired.
Data, however, is not so bad that it would merit further easing at the next meeting. Inflation in the form of the Consumer Price Index came in higher than expected for October and the average for the year rose to 1.8% from 1.7%. Excluding food and energy prices, the figure seems to be slowing down in pace from last year. We shall see if other headlines affect markets as many items remain unresolved and uncertain. In the case of Hong Kong, violence continues, and employers are even advising workers to stay home.
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- No major events scheduled for today.
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The Euro is not picking up steam, the opposite, in fact, it is being dragged down regardless of a surprise in economic indicators. Industrial Production for the Euro-bloc in September actually rose by 0.1% when a contraction of (-0.2%) was estimated.
Additionally, Spain is trying to make headway in forming a government while investors await tomorrow’s release of Gross Domestic Product growth. We foresee Euro climbing if indeed the good trend in data continues, but GDP must deliver above 0.2%.
In another shock this morning, the “Kiwi” is up by 0.8% based on the announcement by the Reserve bank of New Zealand to hold interest rates at their current level of 1.0%. Holding off on cutting rates was not what economists forecasts, thus the wild move in FX in comparison to all other pairs.
Seems like there is exhaustion worldwide with providing easing as officials worry their tools may not have the necessary effect and that later they could really need to have room to cut. The situation at the moment seems a bit deteriorated with political news as well as a slowdown in the progress that was made in October towards trade talks.