FOMC Meeting today could move buck. U.K. GDP reveals slowdown
The U.S. Dollar benefitted from good Consumer Confidence data,
which enabled it to hit the brakes on losing ground to its main counterparts. Thus far this year, the buck has lost
9.6% of its value based on doubts over the political distractions, success in
Europe, and dwindling fundamentals here.
However, the Fed has been a source of appreciation
and although today there is not even a press conference after the FOMC
announcement, the language within the statement could have a potentially
positive impact if it mentions willingness to unwinding the balance sheet.
Their hawkishness could surprise and add to chances of a move in September or
if doubt is cast, a push for December that could sink dollar a bit.
We shall see if Home Sales do anything
for the greenback as Construction figures have driven the currency higher
recently, even if not for an extended period of time. Oil prices keep rising
as curtail promises sound good to some futures-bulls, but some analysts predict
the lowest of prices are yet to come as they see no balance down the line for
the industry with other energy resources growing. Mexican Peso and Canadian
Dollar moves mostly muted thus far.
The Euro is stuck around its highest level in about two years after
Retail Sales grew in Spain and Consumer Confidence climbed in Italy. The fourth and third largest economies
of the Euro-bloc respectively are showing consistent improvements after years
of major struggle. Nevertheless, the fragile nature of current Italian politics
still leaves a lot to be desired since reforms that are considered key to
bettering banks and promote efficiency within government have not been pushed
through. Additionally, there are still forces interested in combating European
integration. For now, things are steady and we see room for Euro strengthening.
Only good figures here can start limiting the shared currency’s gains.
The Pound is surviving despite bad signs
of economic growth. The preliminary reading of Gross Domestic Product for
the second quarter of the year showed a measly uptick of 0.3% as expected,
signaling what some have feared: that indeed Brexit negotiations and the
anxiety over companies leaving are having a negative impact.
Furthermore, Brexit negotiations will
take the August summer break with major issues unresolved after two rounds of
talks that did not clarify the rights of EU citizens living within the UK or
the amounts to be paid by Britain to be divorced and free to dream of great
trade deals. We see Pound only staying around current ranges because of the
dollar’s own weakness, but any sign of optimism in the face of political
distractions here will eventually take a significant toll on Sterling when all
issues with Brexit considered.