The U.S. Dollar is trading in mostly quiet ranges across the board, but perhaps looking to weaken further as we come to close the week with poor economic indicators.
Overview
This morning’s release of Durable Goods Orders revealed a much deeper contraction in September than expected at (-1.1%) instead of the (-0.7%) forecast.
More concerning is that the prior advancement registered in August was revised downward. We shall see if Markit U.S. Manufacturing and Services Purchasing Managers Indices (PMI) at 9:45 AM help in painting a darker figure since the estimated expansion is quite low. A contraction could indeed cement greenback weakness for the month of October. Thus far, the buck is down by 2.2% according to the Bloomberg Dollar Spot Index.
Additionally, market sentiment is upbeat at the moment with some solid corporate profit results across Nasdaq 100 companies and other exchanges. News related to the trade negotiations with China is also positive as reports spurred optimism based on China’s announcement that they would be willing to start with $20.0 billion in agricultural purchases a year if Phase One or a partial agreement is achieved with U.S. officials. Naturally, the return of risk-appetite aid in subduing the greenback.
What to Watch Today…
- Markit Services & Manufacturing PMIs 9:45 AM
Complete Economic Calendar can be found here.
EUR
The Euro is currently gaining as the European Central Bank closes with its press conference, an important moment since it represents the last time Mario Draghi will preside it. As reporters thanked him for his work and patience in the last eight years, they wondered if he had any regrets in his decision-making, but Draghi laughed and said, “only historians can change the past.” He defended the September decision to support the financial environment with some more sovereign bond purchases and easing measures.
Data-wise, PMIs for the euro-bloc did not surprise with a contraction in manufacturing, but the positive is that Services improved more than estimated. German domestic figures were worse, with deeper contraction than thought, but France’s numbers impressed, expanding in both sectors. The shared currency is up by 2.1% thus far this month and it seems merited.
MXN
The Mexican Peso happens to be quite strong, already up by 4.0% in October as a result of steady inflationary numbers and benefiting greatly from the change in tone over trading headlines. Also, trouble in Latin-America, particularly in Ecuador, Chile, and Bolivia with political protests are fomenting the Peso as a safe-haven in the midst of so many headwinds. Oil prices have stayed below $60.0/barrel, but a return to better trade dynamics will likely add to the value of all commodities, which only advances the Peso to higher levels.
