The U.S. Dollar is trending positively against most major peers, slowly overcoming a rout in recent weeks as markets continue to roll with mixed signals and messages
Overview
Following yesterday’s release of Consumer Price Index figures, concern over “stagflation” faded with figures revealing a slowdown in the pace of price growth.
This seemed to hand the Buck a break after days of punishment over ongoing pessimism about the potentially damaging effects from implementing tariffs. While inflation for consumers showed it is somewhat tamed, now the focus will be on Gross Domestic Product growth as well as Purchasing Managers Indices, both crucial for gauging if economic advancement has been compromised or remained steady.
Producers Price Index numbers for February showed that suppliers also experienced less inflation than expected, with PPI excluding food and energy costs revealing deflation coming in at (-0.1%) vs. 0.3% expected. It is important to note while digesting this data that previous readings for January were upwardly revised so this could all balance out. Initial Jobless Claims last week were slightly below estimates, 220K vs 225K, thus labor seems also unaffected. We will see more about consumer mood with the University of Michigan Consumer Sentiment survey out Friday.
What to Watch This Week…
- University of Michigan, Friday 10AM
- Monex USA Online is always open
Complete Economic Calendar can be found here.
EUR ⇓
The Euro started falling and currently now by more than half a percent as European economists are warning that enthusiasm over German spending may be a bit overblown. While recognizing that the fiscal package to come may be good for overcoming a long period of stagnation and contractionary pressures, major banks and analysts are warning that there is a lot of work ahead and no guarantee that all spending will have the desired immediate effect that has been perceived as well as priced-in for rest of the year. With all that in mind, there are signs that the Euro-zone is seeing some success coping with low productivity as Industrial Production in January came in flat but beating its (-0.8%) contraction estimate.
CAD ⇓
The Canadian Dollar is holding its ground, flat after metals tariffs and an interest-rate reduction by the Bank of Canada that was highly anticipated. While talks continue regarding the back-and-forth on tariffs, the rest of the globe is looking to Canada as the main example of how to handle the trade disputes with its largest trading partner. Confusion and uncertainty will likely keep currencies such as CAD in a roller-coaster range of half a percent until there is more clarity on a resolution.
