Weak U.S. Dollar as Markets look for solutions

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Weak U.S. Dollar as Markets look for solutions

MARCH 19, 2019

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The U.S. Dollar continues its weak run ahead of the Federal Reserve policy announcement tomorrow, the biggest risk event of the week.

Overview

In recent days, investors seem to have concluded that the Fed and European Central Bank’s recent admission to the global slowdown will continue to have a positive global economic effect as other nations seek to implement measures promoting growth. As a whole, this is depreciating the greenback, since an overall risk for appetite seems to be increasing. Additionally, commodity markets are also looking to improve along with the surge in the price of oil, the highest since November 12 per WTI Crude.

We shall see if the main counterparts of Euro and Pound can continue their fortunate run if indeed a clear delay to Brexit is discussed and agreed upon at a summit in Brussels this week. Today we will see Durable Goods Orders as well as Factory Orders figures for January, a finalized set of data that did not come out during the partial government shutdown.  The expectation is to reveal an overall expansion of 0.4% in Durable and 0.3% for Factory Orders.

What to Watch Today…

  • Durable Goods Orders (January) 10AM
  • Factory Orders (January) 10AM

Complete Economic Calendar can be found here.

EUR

The Euro has basically erased the losses it experienced after the ECB decided to intervene in financial markets to spur growth at their meeting on March 7thThese two weeks also presented a bit of hope in terms of improved growth that has lowered the concern over recessionary pressures exacerbating across the continent. The Brussels summit will be key to reprieving the Euro-bloc from a major trade-related concern with serious implications, and perhaps the shared currency can enjoy some further re-strengthening.

GBP

Sterling is up as the Brexit situation is starting to get more detailed on the need for a delay. Prime Minister Theresa May thought she could have a short time to revamp negotiations and present a new deal to Parliament, however, the Speaker of the House of Commons, John Bercow said he would not allow a third vote on a deal that had just failed twice.

It better be different, so it looks like the Europeans will help in giving the opportunity to kick the can down the road and the delay will be maybe as long as a year. Regardless, this helps in also shaping the political environment in enough time to present a second referendum as a viable option. Pound will stay afloat since a “no-deal scenario” is going to be avoided.

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