Daily Market Update

U.S. Dollar rises as markets dwindle on poor data

September 16, 2022

The U.S. Dollar is closing the week embedded in dominance across the board as renewed recessionary fears as well as the ongoing price pressures seem to be insurmountable for those trying to get guidance markets. 

Overview

As earnings reports for big companies came out, FedEx threw a ton of cold water on any confidence in equities stating that business conditions were weak; thus, it withdrew its earnings forecast. Additionally, investors and traders are becoming more convinced that the Fed will not stop its interest-rate hikes soon and thus is willing to oversee even more of a cool-down in the economy.Meanwhile, the buck remains the main source of safety in these turbulent and unclear times. The Chinese Yuan has gone beyond the weakest levels usually set by the People’s Bank of China since the country is still facing pandemic-related headwinds plus technological discord with the West. We will see if next week there is room for more dollar strengthening, but we feel now these rages and half-percent to one percent swings will remain.

 

What to Watch Today…

  • No major economic events are scheduled for today

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EUR ⇓

The Euro has failed to sustain any gains, and while there is an indication that the European Central Bank will stay hawkish, the reality of global markets is dwindling any momentum. Additionally, the political situation in Italy is worrying some that the new agenda from the right will run into further political gridlock and keep the country from truly growing.

We highlighted previously in our monthly outlooks how Italy’s economy has been resilient, but the compounded issues of the energy crisis, supply-chain woes, as well as banking issues never resolved put the spotlight on the negative items the country must cope with. Expect more swings and less guidance as we enter colder times.

 

GBP ⇓

The Pound fell to its weakest point since 1985 following awful August Retail Sales data revealing a major slowdown in consumption. While contractions in the figures were estimated, the monthly figure excluding fuel fell (-1.6%) vs. (-0.7%) expected. Non-food as well as groceries dropped across the board as many complain about living in a moment of austerity.

As a new government begins with the pressures also diplomatically from the passing of the Queen, Sterling is more vulnerable than it has been in decades. We see more room for faltering as the Bank of England warns of bracing for a recession.

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