U.S. Dollar Continues Weak Run, Oil Prices Spike, Euro Above Election-High

 

USD

The U.S. Dollar is trading in mixed ranges following a bit of news over the weekend affecting commodity-based currencies and solidifying the Yen. Oil prices surged dramatically as speculation grew that on Thursday OPEC will agree to extensive production cuts, driving up the prices of other commodities and thus boosting petrocurrencies and others such as MXN, CAD, NZD and NOK.

Meanwhile, the Yen extended its gains to 2.2% since the start of last week driven by uncertainty in global markets, underperformance in the U.S., and positive indicators from its shores. Gross Domestic Product advanced for the fifth consecutive quarter and speculation is that of expansion in manufacturing as well as other measures like PMI today.

Without any data today, we will see if any political headlines move markets and keep an eye on the Euro and Pound Sterling as they continue to surge into multi-month highs.

 

EUR 

The Euro reached its highest level since September 8th after a week when political downside risks started to fade for the shared currency and optimism gripped the continent. The European Central Bank may agree on maintaining an accommodative environment, but German Chancellor Angela Merkel feels that the Euro is a bit too weak.

After German trade surplus numbers and strong inflationary growth, Merkel decided to credit the currency’s weakness for the results. She also added that the election in France was great and that she is willing to cooperate as much as possible with Emmanuel Macron “so that he’s successful.”

 

GBP 

The Pound fell slightly based on new Brexit concerns. British Brexit Secretary David Davis (not a typo) stated that the UK would walk away from current divorce proceedings if the exit bill is too high a toll. Apparently, the Brits have a budget and they do not wish to pay 100 billion Euros or more. It is likely the lawmakers who are meeting today in Brussels to set a mandate for EU Brexit negotiator Michel Barnier are not going to lower the cost.

This feels like the spark we have been waiting for to make the drama of this break-up far more exciting than it’s been since it started. The back and forth shall entertain and put serious downward pressure on Sterling.