U.S. Dollar Weak to Start the Week

USD

The U.S. Dollar worsened as good data out of the Euro-zone and the United Kingdom propelled European currencies while tensions over tax reform downplayed the buck’s performance the week prior. Although the greenback has been pushed by solid indicators, distractions at the White House and congressional gridlock are affecting the currency’s prospects at the moment. Odds of a hike by the Federal Reserve before the year ends stand at 76.7% despite the contraction in Non-Farm Payrolls last week.

The Bloomberg Dollar Spot Index slipped by almost half a percent, but it could see a bit of a comeback starting tomorrow as FOMC Minutes from the last meeting may further establish the Fed’s stance on the health of the economy. More importantly, Consumer Price Index and Retail Sales will be released at the end of the week and if they meet expectations, there could be rise based on fundamentals. Geo-political pressures could likely remain an obstacle for Euro and Pound advances.

 

EUR

The Euro climbed as a result of strong Industrial Production numbers out of the three largest economies of the monetary union. Germany, France, and Italy all experienced expansion. French figures were slightly weaker, but revised upward for previous readings. Although the economy maintains momentum, the continent remains alert at the situation in Spain, where the region of Catalunya’s congress will meet today to consider declaring independence.

By doing so, the region risks economic calamity with companies ready to flee as well as potential for clashes with national armed forces in Barcelona, a sight no one wishes to see once again. The shared currency may be more vulnerable than it seems to any developments that may come from all this.

 

GBP

The Pound rose after impressive Industrial Production figures revealed an unexpected 0.4% increase in August. Nevertheless, the economy may be more fragile than it seems as the deficit in goods and services surged to 5.6 billion pounds, representing the worst shortfall in goods of all time. The strengthening in Sterling can only be explained as a consequence of deeper faith in the Bank of England’s ability to hike because of one figure, while the other is ignored for the time being.

Brexit talks and its shortcomings will continue to play as a downside risk for Pound this week. Momentum is building behind petitioning for Prime Minister Theresa May’s resignation after a disastrous speech in which even the sign behind her started falling piece by piece, symbolizing the crumbling of her plans to consolidate any power and keep it all together.