U.S. Dollar slightly up following an eventful week

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The U.S. Dollar is trading in mixed ranges after swinging plenty in the week to squeeze out a half percent gain against the majors per the Bloomberg Dollar Spot Index.

Overview

Lack of data prevented us from getting a clearer picture of how things came to a close in December, thus affecting FX flows and long-term business decisions.

Stock indexes tried to push forward despite uncertainty over Brexit and other concerns with trade that have plagued markets for a while. The government shutdown continues without much in terms of a compromise in the horizon, but in today’s fast-changing pace of news it could easily change. If this impasse drags into March, the Gross Domestic Product could be threatened, contract, and could spark actual recessionary pressures to the economy.

Main items today to measure economic as well as greenback strength will be the monthly Industrial Production and University of Michigan Wolverines Consumer Sentiment readings at 9:15AM. The latter figure will be of interest as it had turned sour most of last year until the last quarter. Small business activity surveys will be key indicators of whether the economy is headed downward or not next six months.

What to Watch Today…

  • • Industrial Production 9:15AM

    • Univ. MICHIGAN Consumer Sentiment 9:15AM

EUR

The Euro has been subject to spikes and steep falls in this young new year based on the pessimism displayed by the European Central Bank’s President at a time when economic indicators have signaled slowdown and in some cases even contraction. Consumer Price Index figures did not impress at 1.6% for the end of the year, but many credit this to the fall of energy prices, only starting to recover recently.

While we foresee Euro at higher levels later, the spike may be quite gradual since the shared currency will be vulnerable to any indication that stagnation persists. Some of those fuel savings must be re-invested, make companies want to hire more and so on for Euro to actually benefit.

GBP

The Pound is up by 1.3% already this year because of hopes that the failure of Prime Minister Theresa May’s original Brexit deal with the EU at the hands of Parliament can spark a quick motion to improve the outcome of talks with Europe. Or, as we and a third of the voters in Britain believe, a second referendum should be scheduled for this year.

No matter what, traders are betting on business leaders adding enough pressure on the population to vote “Stay,” by perhaps promoting the idea that their livelihoods, their jobs, their housing could be immediately in danger if there is a divorce, of any kind, but especially one where all trade deals would have to be re-built from scratch.

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