USD
The U.S. Dollar is trading in tight ranges as European markets flourished overnight following good news in terms of data out of the Euro-bloc. Stock indexes were mostly in the green worldwide and the dollar also surged slightly as a safe-haven to crisis.
Unfortunately, on yesterday evening another senseless act took the lives of concert goers in Manchester and it seems that the attack is being claimed by the cowardly “evil losers” of ISIS. The greenback tends to gain during chaotic situations, such as terrorist attacks elsewhere, and Pound did indeed depreciate.
Markit Manufacturing and Services PMI are due later this morning and are slated to show a faster expansion than last month. New Home Sales will also hit the wire at 10AM. With economic figures and FOMC Minutes tomorrow, we shall see if the dollar regains some steam after experiencing its worst week in a year.
EUR
The Euro may have dwindled earlier as the North American markets awakened, but is now advancing as a result of stellar Purchasing Managers’ Index growth. The measure came in at 56.4 slightly over the expected 56.2, which represents its fastest pace of progress in six years. With distractions in Washington and divergent performance recently, the European markets are looking like a solid buy. Many traders agree that global investors are right to seek the less volatile situation in Europe; however, where we disagree is the long-term.
Italy is the third largest economy and the struggles are real, not just in banking, but in almost every aspect of the economy. The averages for several indicators would be higher for the Euro-zone if Italy wasn’t in such a dismal situation that involves a fragile political stage as well. 2017 may not play out to be a year when the Euro hits parity with the “buck,” but the closer we get to 2018, the closer we get to Italian general elections, the more pressure on the shared currency.
GBP
The Pound fell yesterday based on fear that Brexit talks may take a turn for the worse as UK officials vowed to reject any Brexit deal that forces payment of €100 billion or more to leave the EU. Nevertheless, the attack yesterday is likely weighing heavily on the country and the geopolitical concern of the negotiations may be set aside.
There is no data and we will monitor if Sterling trends downward from the current havoc. Gross Domestic Product numbers will be out on Friday and any further momentum may manifest on the exchange rate then.
