The U.S. Dollar fell this morning, erasing all of yesterday’s gains after a wave of optimism regarding the economic outlook for the second half of the year.
Overview
While it seems like most traders agree that there will be some tough times ahead, they differ in how deep a hit it will signify to overall global growth. More importantly, there is a growing number of analysts who feel that central banks will see less of a reason to keep hiking interest rates as aggressively as in the last one and a half years.Additionally, China’s prospects for a more stable and interconnected year are convincing investors that the toughest of times may be behind us. It helps that the Chinese government announced further measures to aid the housing and developer sector.Oil prices slipped after reports that demand is waning in addition to the demand for natural gas since the friendly weather and stockpiling have helped ease the supply concerns. Subsequently, equities are bound to advance, with the Europe Stoxx 600 climbing by over 2.0% during their trading session. With more activity, expect more headlines and perhaps wilder moves against the buck as positivity has its moment.
What to Watch Today…
- No major economic events are scheduled for today
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EUR ⇑
The Euro climbed this morning following the news out of China as well as data serving as evidence that the European Central Bank still has room left for increasing borrowing costs. German figures for inflation and unemployment yesterday were further revised, which clarified that the disinflationary trend across the country was mostly due to energy rebates the government has aided the population with to ease concerns over energy costs.
Also, the labor figures proved to be part of a resilient economy that can perhaps withstand more borrowing costs. Inflation seems somewhat stubborn, but it also fell in France due to less materialized fears and the effects of Russian supplies being cut off.
AUD ⇑
The Australian Dollar advanced by over 2.0% on good energy news that could impact the trading relationship with the world’s second-largest economy. China announced that it will lower restrictions on imported coal products from Australia, a sign that the country is not going to isolate itself any further and expand on its global scale.
Fueling China’s economy provides Australia with good opportunity to increase their overall value as a global partner. Economically, everyone is hoping that China will be of major aid this year instead of a drag.
