Wednesday, March 15, 2017

U.S. Dollar staying put until Fed meeting at 2PM. Dutch election today 

USD
The U.S. Dollar is range-bound, sticking to levels that have been stagnant as investors and traders keep eyes on the Fed decision and elections in the Netherlands. Today’s economic data met expectations as Consumer Price Index and Retail Sales expanded by 0.1% each. We expect the Fed to not only hike the Federal Funds Rate, but also to sound the trumpet of optimism after data has shown the economy is on good pace for growth in many aspects such as inflation and even wages. The “buck” may not gain a ton since the hike is priced in, but the tone at press time could have a surprising impact one way or the other.
Markets rose overnight, helping some resource-based currencies that had been sliding for days. Oil prices declining hurt the commercial value of other commodities, but a report of lower than estimated inventories of shale oil in the U.S. put a stop to the bleeding. The neighboring CAD and MXN are improving as well as the oceanic NZD and AUD.

GBP
The Pound erased some of its early week losses because it seems not a majority of Scots are feeling the whole separation from the UK as much as their fearless leader. Although Nicola Sturgeon diligently started the legal process to establish a referendum asking Scotland if it wants to be independent, a few polls showed that 57.0% of those surveyed would like to stay British.
It seems like Euro-skepticism is not just a far-right phenomenon, but a growing sentiment amongst many across the continent that the Union may no longer be the best system for economic or social cooperation between nations. GBP is still on an almost 4.0% slide since the start of February. The instability will keep downward pressure on the “quid.”

EUR

The Euro, a currency chained by the shackles of political uncertainty, will likely trade around current ranges until we get a clearer picture of results in the Netherlands. Twenty eight parties are on the race for power so a coalition is expected to form in order to have a government. Geert Welders, the rightist politician who could shake things up in regards to trade and immigration, has lost some steam recently and his Freedom Party members may not be able to gain much support from other parties unless their numbers are impressive. A lot is up in the air, but all we can do now is to wait for the chips to fall.  

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