Euro Under Pressure and U.S. Dollar Bound for Weekly Gains after Bad Run

USD

The U.S. Dollar stayed in mostly tight ranges overnight, losing ground to the Canadian Dollar after the release of good employment data for the neighbor up north. Oil prices improved boosting Mexican Peso further as well after yesterday’s decision by Banxico (central bank) to raise its interest rate to match inflationary pressures.

President Donald Trump will meet with Japan’s Prime Minister Shinzo Abe later today. Commentary from their meeting could potentially move the USD/JPY pair, but if not it will at least be an interesting piece of news with tweets likely to follow. Trade and investment by Japan will be some of the more imperative topics of the talks.

Stock markets went up mostly in the Asian session, keeping currencies in the Pacific Rim in familiar levels. Prices of metals rose, which means that currencies such as AUD, NZD, and ZAR could advance further. The Bloomberg Dollar Spot Index has recovered by a mere 0.7% and if stays that way throughout today it’ll mark the first week of gains for the greenback since mid-January.

 

EUR

The Euro fell by 1.5% this week based on concerns over a possible French push for separation from the European Union, Greek debt issues, and the upcoming battle over a deal for a “smooth” Brexit. Elections coming up in the next few months mean that the opposition to current trade agreements will be in full display and gauging popularity over major changes will weigh on the Euro moving forward.

Although Greek creditors are working on coming up with an acceptable framework of measures to keep the country’s debt-relief alive, hesitation from German and other state officials in providing aid is mounting. Greece’s political leadership struggles to completely transform its fiscal policy because the party came into power promising exactly the opposite of what the EU was asking for: deep cuts in spending, increases in tax revenues, and financial reform. 

“Grexit” was feared just three years ago, Brexit became a reality, and “Frexit” could be in the works if rightist candidate Marine LePen gets her way.

 

GBP

Although manufacturing and industrial data out of the UK solidifies that the economy is growing at a decent pace, the Pound failed to appreciate significantly as a result of anger amongst European Union lawmakers with Prime Minister Theresa May’s plans for a toughly negotiated Brexit.

Even if the UK does not ask for participation in the single market, it wants to accomplish a relatively favorable deal in terms of trade and tariffs while threatening to be very tough on security and immigration if not pleased two years from now with a final pact. EU officials are determined to negotiate from a stance that sends a message: you are worse off leaving the bloc. GBP levels are around the same as the start of the week.