U.S. Dollar takes more ground, markets dwindle


U.S. Dollar takes more ground, markets dwindle

SEPTEMBER 30, 2019

The U.S. Dollar remains in multi-month as well as multi-year highs against most counterparts as September ends with confusion across markets whether to take seriously recent progress in trade talks between the U.S. and China after some tensions developed at the United Nations General Assembly.


Uncertainty over the potential escalation of the trade conflict that would take the form of limiting financial stock listings from Chinese companies and investors has clouded market decision-makers once again. In such a world, the buck remains dominant as its interest rates remain high and economic growth the most consistent in comparison to the globe.

A slew of data awaits us this week as we gauge the end of the third quarter. Developments elsewhere such as Brexit and economic performance indicators will help either strengthen the greenback or just stop its stride.  Much would have to change for FX to start looking at the dollar with grimace rather than as a source of safety.

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The Euro keeps slipping as individual member nations show signs of weakness going into the fourth quarter. While the unemployment rate for the bloc went down from 7.5% to 7.4% and German Retail Sales expanded, Spain showed no inflationary growth and expectations of poor Purchasing Managers Index figures in Germany show there is fragile sectors of the economy. We have estimated return for Euro in past quarters, but nothing will be fruitful until German numbers expand and that will take a surprise.  


The Pound could be in trouble as second-quarter Gross Domestic Product figures revealed the first quarterly contraction in seven years. Indeed, the expected (-0.2%) contraction represents the lowest point in the last decade after recovering from the financial crisis. Additionally, political headlines are hurting the outlook for any smooth comeback as the Prime Minister faces allegations of improper sexual behavior as we enter a crucial time for Brexit: the last month of the deadline.