March 15 2019

Mar. 15, 2019 (Western Union Business Solutions)  – The U.S. dollar softened anew Friday, something it’s done for the better part of the week. The greenback was mildly lower against the euro, yen and Canadian dollar. Sterling steadied after a Brexit-induced roller coaster week, while the Aussie, kiwi and emerging markets strengthened. While flat Friday, sterling was the week’s star performer after the latest Brexit developments suggested a lower risk of Britain crashing out of the EU without a trade agreement. The U.K., albeit in principle, ruled out a messy, no-deal exit and voted to push back its March 29 departure from the bloc. Sterling’s nearly 2% rise this week was on track for its best performance in almost two months. The buck’s nearly 1% decline this week was on pace for its worst week of the year. Signs of a moderating U.S. economy weighed on the dollar ahead of next week’s all-important Fed meeting.

 

 

Euro creeps higher

 

The euro was little changed Friday but on track to eke out a weekly gain against its U.S. rival. The euro cleared short-term resistance this week when it climbed to one-week highs. However, fundamental forces amid a weak European economy and the ECB postponing rate increases have capped upside for the single currency. Data today confirm an anemic 1% rate of core inflation, a stubbornly low level that keeps policy normalization off the radar.

 

 

Sterling firm after bullish week

 

Sterling was flat after a roller coaster week in which it soared nearly 2% to nine-month peaks. The pound’s performance weekly performance was on track for its best in nearly two months. The pound outperformed after the latest Brexit developments suggested a lower risk of Britain crashing out of the bloc in disorderly fashion. The U.K. voted against a no-deal exit and decided to ask the EU for a later departure from the bloc. Still, the thick fog of uncertainty that Brexit represents hasn’t changed much, a factor that could keep the pound on an unpredictable near-term path.

 

 

Oil weighs on loonie

 

Canada’s dollar tracked oil markets lower Friday. For the week, USDCAD was poised for a decline which allowed the Canadian dollar to rebound from two-month lows. Oil’s push to 2019 highs petered out, with crude down more than a percent and below $58. Key for the loonie next week will be a midweek U.S. central bank decision and late week numbers on Canadian inflation and consumer spending. Further signs of a moderating Canadian economy would bode well for USDCAD.

 

 

Dollar slips, Fed in focus 

 

The dollar index was on pace for its worst week of the year as tepid inflation reinforced the Fed’s steady outlook for monetary policy. Data today on factory growth and the Empire State index also underwhelmed. Consequently, the Fed next week is likely to keep in wait and see mode on interest rates, a cautious stance that’s checked the dollar’s rise. The Fed on March 20 will also issue fresh projections for the economy and interest rates. For the buck to sustain its underlying bullish bias, the Fed would need to keep the door ajar to a rate hike by year-end.

 


USA