The U.S. Dollar is steady this morning to close a week of losses that sank it to multi-month lows against pairs across the board.
Overview
Overall, the greenback weakened to its lowest point since the start of February according to the Bloomberg Dollars Spot Index. Amongst the majors, Euro touched a one-year best against the buck while Pound reached a high not seen since last Summer. Much of the depreciation is due to data finally showing signs of an inflationary slowdown as recent releases have registered figures beyond their deflationary expectations.
March Import and Export Prices all came in lower than estimated. Meanwhile, Retails Sales excluding and including Autos revealed deeper contractions than economists forecast also marking a second consecutive month of prices declining. We still have Consumer Sentiment from the University of Michigan survey at 10 AM.
It is expected to show a continued sense of pessimism and uncertainty about the economy like it did last month. In many ways, the Fed’s expectations for a dented economy are manifesting themselves. Many headlines heading into the warmer weather will highlight the fear over oil prices and what North American companies could do to counter supply-cut decisions by OPEC+. It will swing things and maintain high levels of volatility.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
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EUR ⇑
The Euro made some significant progress in recovering its value after a tumultuous week for the buck that rewarded the shared currency by 1.5%. Next week, we will get a look at inflationary advancement in the form of Consumer Price Index on Wednesday while looking at the costs to suppliers through April Purchasing Managers Index numbers. We feel that there will be a bit of central bank policy divergence as the year goes on and it is more likely that the European Central Bank has to keep its foot on the gas and stay on tightening mode. Any shocks in prices going down some could be enough to affect the Euro gains gathered this week. The opposite happens and those gains will be extended.
MXN ⇑
The Mexican Peso has remained strong and is trying to squeeze a half-percent uptick as commodities along with oil gained ground. While the buck experienced headwinds based on the idea that the Fed may slow down on its hiking path as the U.S. economy chills a bit, the Peso continued to be a desirable investment through carry-trade value. Additionally, as we have pointed out in recent reports and write-ups, Mexico is on a streak of improving indicators with February Industrial Production readings this week demonstrating a growing pace registering at 3.5% vs. 3.0% expected. While Mexico’s economy sees growth, other economies are struggling to find it and that makes Peso a beacon of strength.
