The Greenback hammered after a weak ISM manufacturing index and dovish comments from Bullard
Wednesday 4 September, 2019
Daily Currency UpdateUSD - United States DollarThe Greenback was under pressure yesterday and has fallen over 0.4 percent from the peak of the day when the Federal Reserve Bank Chief of St. Louis James Bullard, who is known to have a dovish monetary policy stance, called for a 50 basis points cut. He said, "We are too high," regarding rates. He added, "…in this situation I would respect the market signal," and, "We should have a robust debate about moving 50 basis points at this meeting." Additionally, he noted,“…it would be better in my mind to go ahead and get realigned right now," rather than moving a quarter-point in September and again in October. The U.S. dollar fell when the ISM manufacturing index recorded the first sub-50 reading since the summer of 2016. Some sophisticated market participants, such as investment banks, have downgraded their global growth forecasts, including the American one. The ISM manufacturing index has historically been one of the best leading economic indicators and with new tariffs coming into effect and the global backdrop continuing to weaken as the threat of a recession rises. On the flip side, Federal Reserve Bank of Boston President Eric Rosengren said the U.S. economy remains, "relatively strong," and, "If the consumer continues to spend, and global conditions do not deteriorate further, the economy is likely to continue to grow around 2 percent," despite clearly heightened risks. Rosengren is known as a hawkish Fed official.
Key MoversThe British Pound is bouncing, and the GBP/USD pair is up 0.85 percent this morning after lawmakers moved to reduce the risk of a disorderly Brexit. Yesterday, it was a volatile day as well when the Pound rallied ahead of the vote. 328 - 301 voted to block a no-deal Brexit. At the same, Boris Johnson responded by proposing a snap election, but he has been defeated in his first-ever parliamentary vote as Premier. As a consequence, the entire project of Brexit was on the line once again, which helps the British Pound. According to Bloomberg, U.S. President Trump seems to be trying to reach a trade deal with China before the presidential election in November 2020. Trump suggested through Twitter that negotiations will become trickier if he wins a second term. He tweeted, "Think what happens to China when I win ... deal would get MUCH TOUGHER!"
- USD/CAD: 1.3243 - 1.3313 ▼
- EUR/USD: 1.0970 - 1.1043 ▲
- GBP/USD: 1.2159 - 1.2207 ▲
- AUD/USD: 0.6787 - 0.6822 ▲
- NZD/USD: 0.6332 - 0.6375 ▲