Economic Data Solid, Yet U.S. Down Big Time Against Euro

The U.S. Dollar is trading in mostly negative ranges, losing ground overnight as traders favored the European Central Bank’s news of plans for better communication and positive political developments in Germany.

USD

Per the Bloomberg Dollar Spot Index, the greenback is down by over 1.0% for this week. A mix of uncertainty over U.S.-denominated assets such as treasury bonds, domestic political distractions, and success in other regions is negatively impacting the dollar’s value.

Fortunately for the USD, Consumer Price Index figures released this morning came in better than expected. The inflationary growth gauge shortened as (CPI) improved by 0.3% when excluding food and energy prices, beating the 0.2% estimate. Average CPI for the year is up to 1.8% from 1.7%.

Additionally, Retail Sales met expectations of 0.4% growth. At the time of writing, the dollar was indeed able to stop the bleeding against major counterparts following the data.

 

EUR

The Euro reached its highest level in nearly three years overnight before pulling back after economic indicators boosted then U.S. Dollar. Progress in the negotiations to build a governing coalition in Germany helped the shared currency gain ground on the basis of political stability after months of gridlock.

Economists have assessed the situation in the Euro-zone as positive, the ECB has verified it, and traders now believe Euro is poised to be dominant in 2018 with less risks tied to it than last year. It certainly feels like it is on a higher pedestal.

 

GBP

The Pound is up, but there is nothing in the news or Brexit negotiations that would indicate why there is such strong faith in the currency. Although Industrial Production performance impressed earlier this week, the items related to creating a new trade deal have been anything but optimistic.

Discussions are taking place about the merits of calling for another referendum to decide the fate of U.K. relations with the EU, to see if perhaps the whole thing can be reversed. At this point, that could carry even greater risks and the aftermath could be packed with repercussions regardless of the outcome. Banks are also lining up to move from London to Frankfurt, but Sterling is ignoring these threats.