The US$ is retesting the highs of the last few months in expectation of the FOMC meeting tomorrow. The market will likely stay quietly strong waiting for news from that meeting, which is expected to reaffirm a low interest rate, pro-growth Fed policy. Housing Market index will be watched this morning for any signs of recovery. The index has fallen steadily after peaking in Dec 2017 and is one of the reasons the Fed has softened its rate increase policy.
Despite strong commodity prices in oil and metals, two major Canadian exports, the C$ is failing to rally. News yesterday of yet another resignation in the Government’s inner circle due to an ethics scandal isn’t helping. The Ethics Commissioner is investigating claims of influence peddling that could take months to resolve just as the next election is due on October 21st. Look for some slight weakness today as C$ will also be waiting tomorrow’s FOMC announcement.
The EUR tried to rally yesterday, but it failed and remains weak this morning. Spain is Europe’s strongest growing economy at 2.4%, however the Spanish government collapsed over a budget impasse triggering a third election in four years while at the same time a trial over Catalan separatists is captivating the country. Look for a rebound in the EUR today, but the overall trend remains down.
Key Economic Numbers: Forecast Previous
US NaHB Housing Index (Feb) 59 58
- Drummond Gill