The U.S. Dollar is trading weaker against most counterparts, yet the Pound is the great exception as hopes for a smooth Brexit may be threatened, which naturally sank the currency.
Overview
Trade tensions are a constant nag on stock indexes whose rally has eased after details remain unclear over the U.S.-China trade agreement in principle.
Additionally, the possibility of a USMCA ratification that would revive what NAFTA was as a trade agreement between Mexico and Canada is boosting the Mexican Peso. Naturally, oil prices rising by over 9.0% since the start of the month has aided other commodity-based currencies as well. The Australian Dollar is one of the beneficiaries from the optimism, up by 1.6% in the past two weeks.
We shall see how Gross Domestic Product affects the buck any further, but it seems like negative data on the disappointing side could lead to further losses. Overnight the buck recuperated some ground as some optimism has waned, but we shall see if this is the start of a reversal or just a hiccup for global markets.
What to Watch Today…
- No major events scheduled for today.
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MXN
The Mexican Peso has improved by 3.3% since December began primarily as a result of growing positivity over an economic outlook in 2020 that could feature the agreed-upon business activity within the USMCA trade pact. Furthermore, the rapid rise of oil prices, commodities rising from China and the U.S. likely making amicable steps in trade relations are good foundations for Peso appreciation. We are on the side of the room to weaken as the negative pace of GDP growth, worst since 2013, could lead the central bank to lower interest rates significantly down the line.
GBP
The Pound is down by over 1.5% as news regarding the Prime Minister’s plans is resurrecting the possibility of a no-deal Brexit. Indeed, Boris Johnson is said to be plotting to get rid of the law recently passed by Parliament forbidding a Brexit that included no deal over the border, trade, security, etc.
If true, a hard Brexit without plans of interacting with the EU moving forward creates the chances for further political havoc and increases uncertainty for businesses already confused over how else to plan over Brexit requirements and tribulations. The election gave power to Johnson who seems to want a completely new re-negotiation on a deal or no deal at all.
