The U.S. Dollar is trading in weaker ranges all across the board, hitting the lowest level in over two weeks per the Bloomberg Dollar Spot Index.
Overview
Yield for 30-year Treasury bonds rose above 5.0% and stocks faced further retreatment as markets become nervous regarding the negotiations over the Tax Bill and its possible effects on the economy if it adds to the budget deficit. Republicans in Congress remain working on overcoming hurdles so we will be monitoring progress. Meanwhile, geopolitical developments are also adding to anxiety for all market classes with potential escalation of armed conflict in the Middle East.
Oil prices rose by 1.5% based on reports that Israel is preparing to strike nuclear facilities in Iran. There will hopefully be some clarity on what could happen throughout the day. What does seem clear is that the Buck is not acting as a safe-haven in the midst of so much turmoil and signs of instability. On the other hand, the Japanese Yen and Swiss Franc rose by over half a percent.
Expect struggles for equities as big companies such as Target Corp. cut their sales estimates primarily because of uncertainty. Without any data until tomorrow’s release of Purchasing Managers Index, trading will be very headline driven.
What to Watch This Week…
- PMIs tomorrow across key regions, including U.S.
- Monex USA Online is always open
The complete Economic Calendar can be found here.
GBP ⇑
Sterling strengthened overnight and is continuing its surge as it has already reached its highest value since the end of April. Bets of cuts to interest rates by the Bank of England are going down with inflation remaining a battle for the British economy. Consumer Price Index figures from April revealed all measures above expectations with the annual average now at 3.5% after a 1.2% jump for the first month of Q2. Tariffs and doubts over the future of free trade have put inflationary pressure on the regional economies which is forcing a rethinking over closer cooperation with European neighbors.
MXN ⇓
The Mexican Peso is surprisingly down, being the one exception amongst the Majors in falling to the Dollar this morning. Struggles in the American economy may translate into issues for Mexico, but the nation is also mourning after a violent episode as two government officials lost their lives. While violence infiltrates the news cycle, it adds to an already fragile and nervous mood in the financial environment. As far as economic indicators go, Retail Sales for the month of March came out shockingly confident, expanding 0.5% vs. 0.1% estimated while the annual average improved to 4.3% from 2.2%.
