U.S. Dollar weaker in face of central bank normalization elsewhere
The U.S. Dollar weakened this morning
following commentary by European Central Bank President Mario Draghi on working
towards a less accommodative monetary policy. The signal of the ECB slowing
down its easing as inflation builds propelled the Euro to its best quarterly
performance since 2011. Along with Euro, other major currencies rose by
over half a percent against the greenback after poor economic indicators hit
the wire once again, adding to concern over a potential slowdown of the U.S.
We will hear from Fed Chairwoman Janet
Yellen at 1PM EST to see if her tone continues to be positive. Other Fed
officials have reiterated that this year will indeed end with three hikes to
the Federal Funds Rate, but outlook on the economy has dwindled across markets.
Consumer Confidence later at 10AM might give us further data on the state of
consumption, which is a concern.
The Euro reached its highest level in two weeks as a result of
faith in the ECB’s ability to keep a healthy economic environment while
preparing to reduce its mark on intervention such as quantitative easing. The current monthly injection of EUR 65billion
will end in December.
Additionally, the Euro is gaining on
improved numbers out of Germany and the euro-bloc overall as well as less threats
to the established order in Italy where Beppe Grillo’s Five Star Movement Party
suffered setbacks in local elections. Although, it is crucial to point out
that former controversial Prime Minister Silvio Berlusconi’s party has been
earning some seats, another political thorn that markets do not welcome fondly.
The Pound is up today after fluctuating within a 50-point range in
the last few sessions based on uncertainty over Brexit and Prime Minister
Theresa May’s efforts to still have a governing majority. The PM’s work with the Northern Irish
Unionist Party is finally paying off as the group has agreed to cooperate on
the side of conservatives in Parliament. Bank of England’ Mark Carney will be
speaking today about growth in consumer lending and his views on the effects of
negotiations with the EU. GBP is
vulnerable to losses, but has also been resilient following the shocking