The U.S. Dollar is starting the week in weak ranges as uncertainty over U.S. policies on trade continues to foment deep uncertainty
Overview
Indeed, over the weekend, word from the U.S. President was not entirely clear on what deals may be coming up for bilateral trade with some countries. More importantly, President Donald Trump explained that there was no plan to address concerns over tariffs with China as there is no plan for talks to bring any tariffs down. It was also clear that the administration sees tariffs as crucial to their strategy in using economic leverage to generate concessions and results, meaning the plan to keep certain levies is indefinite.
Equities are likely to suffer from the sour mood, especially after a major recovery across indices that had the S&P 500 exchange experience its best winning streak in two decades. Meanwhile, Gold is holding steady as a safe-haven asset while crude oil prices are down by about 5.0%, based on deteriorating outlooks about activity in shipping and overall trade.
While today we get to look at some Purchasing Managers Index data from April at 9:45AM, traders and investors are mostly eager to hear from the Fed as they announce their decision on Wednesday. The expectation is to hold rate where they are, but the questioning at the press conference will be crucial. We shall see if after two weeks of markets trying to stably climb, the Buck and domestic assets will return to losses as the “Sell America” trade makes a strong return.
What to Watch This Week…
- FOMC Meeting & Press on Wednesday 2PM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇑
The Euro is off to a strong beginning of the week, up by half a percent as doubts over America continue to help the advancement of European assets. Investors are certainly more positive about Europe than was expected this year. The most recent Investor Confidence survey from Sentix in May revealed less negativity than was anticipated, with managers glad that there is a desire to expand fiscal measures and invest in upgrades. Again, the reading was still negative as uncertainty over the future of trade with the U.S. plagues all else.
MXN ⇑
The Mexican Peso, unlike its other peers, is not improving nor losing against the U.S. Dollar as the comments over the weekend left anything related to Mexico untouched. In comparison to other countries and their respective leaders, Mexico President Claudia Sheinbaum has been able to maintain a good line of communication with the U.S. administration and thus far the USMCA remain as the pact for reference on trade. In the next few days starting tomorrow, measures of investment will provide a glance at activity since February and Thursday we break down inflation via Consumer Price Index for April.
