The U.S. Dollar is generally stronger this morning, extending modest gains from earlier this week.
Overview
If the gain holds, the U.S. Dollar Index will achieve its first weekly gain in four. October is likely going to come to an end with a buck depreciated across the board.
The economic docket is relatively light with only the University of Michigan Consumer Sentiment due out at 10 a.m. But next week’s agenda is packed with tier-one data including Gross Domestic Product and Non-Farm Payrolls. On Wednesday, we will get guidance from the Fed as they decide whether to cut further into interest rates. This week’s steady PMIs certainly left market watchers feeling like the economy is in a mixed state as Durable Goods Orders figures sank into contraction. The dollar will benefit if the global pessimism maintains, but the likelihood of further easing by the Fed could leave these ranges sticking into next month.
What to Watch Today…
- University of Michigan Consumer Sentiment 10 AM
EUR
The Euro hit the brakes yesterday as digesting Mario Draghi’s last press conference as head of the European Central Bank made investors feel quite doubtful about the continent’s prospects for economic growth. A recovery that had built some momentum into last year has faded and Draghi’s warning to his successor during the presser was that there are “prominent downside risks” and deflationary pressures.
The sentiment was followed by actual data this morning highlighting the snail-pace of Producers Price Index growth in France for the month of September at 0.1%, which makes the year’s average (-1.0%). One positive slice of data did show better than expected surveys about the business climate and expectations in Germany, a country desperate now for better signs in any sector.
GBP
The sterling dropped again overnight, coming off its 5-month high versus the dollar seen late last week. Brexit headlines continue to hold the GBP/USD cross hostage. The European Union is said to be considering how long of an extension they are willing to grant the U.K. past the October 31st deadline. Prime Minister Boris Johnson called for a snap election for December 12th which is complicating matters for the EU.
The Chancellor of the Exchequer Sajid Javid said that the U.K. can no longer meet the October 31st deadline, which was assumed anyway. But the sterling came under pressure after he said that the U.K. government cannot take a no-deal Brexit scenario off the table. While we understand this is a prudent take, markets begun pricing out a no-deal scenario two weeks ago, allowing the Sterling to fly.
