The U.S. Dollar is trading in mostly familiar ranges after a weekend marked by cooling of tensions between China and the U.S. when it comes to the imposition of further tariffs.
Overview
Using social media, the U.S. President has stated that negotiations and getting along will go “fine.” Meanwhile, the U.S. government shutdown is entering its fourth week, but markets have not erased losses in equities as earnings from corporations have overshadowed any of the negativity associated with federal disfunction. As long as the Bureau of Labor Statistics, the Bureau of Economic Analysis as well as Census Bureau remain closed, we will not be able to know official figures for everything from Initial Jobless Claims to Factory Orders or inflationary gauges such as Producer Price Index.
Expect China to remain in the spotlight with demands coming from the U.S. administration throughout the day. It is possible that any improvement on that trade front can be perceived as positive for the global growth narrative and thus sink the Dollar some. While we may not get eyes on some crucial numbers, on Friday we shall be able to derive something out of economic situation from S&P Global U.S. Composite Purchasing Managers Index.
What to Watch This Week…
- Compliance Webinar – October 23rd @ 4pm EST – Save your seat
- Monex USA Online is always open
EUR ⇓
The Euro is dwindling a bit after gaining ground last week, which helped in easing some of the decline that has marked the currency in the past four weeks. At the moment, the shared currency has fallen 1.3% since the end of September. With French issues regarding parliamentary disagreements over spending and revenue collecting fading away from the headlines, the focus for the European Union as a whole may shift towards finding a resolution between Ukraine and Russia while continuing full support of the former in the armed conflict. As Israel and Hamas enter a process towards building some peace, European leaders are hoping they can use billions not to just arm Ukraine, but to begin a plan for rebuilding. Other than geopolitical maters, Construction figures from Q3 and PMIs will be out throughout the week.
CAD ⇓
The Canadian Dollar has dropped by 1.5% in value ever since the end of September and is very close to trading around its weakest point since the beginning of April. Low levels of growth and tensions with the U.S. over tariffs made business activity suffer while the Bank of Canada has been forced to be more stimulus-driven to alleviate the financial environment. With the current overnight interest rate at 2.50%, officials may find it appropriate to slash again by another 25 basis points, something that is basically guaranteed per World Interest Rate Probabilities. The key will be in their explanation and call for future reductions, and a “dovish” tone may sink “Loonie” deeper quickly.
