In their March 2018 Currency Outlook report, Tempus, an exchange rate and global payments company, provides a detailed report including the following topics and sections:
- The USD recovered by 1.5% according to the Bloomberg Dollar Spot Index
- Among the G-10, the Canadian Dollar fell the most, 4.6%
- The Japanese Yen gained 2.5%, reaching its highest level since 2016
- Global markets saw risk-aversion and volatility with concerns over higher borrowing costs
Brexit process renders the British Pound down 3.8%
The View – As Markets Sour, the USD Enjoys Gains
- Easing measures that allowed for markets to recover after the financial crisis are coming to an end.
- Stock indexes reacted poorly to the plan for an end to the aid in the form of monitory policy.
- New head of the Fed, Jerome Powell, gave renewed confidence in the Fed’s outlook in his testimony to congress, driving the USD higher.
- Better than expected US retail sales and inflationary growth as Consumer Price Index is growing to a level for which the Fed has hoped.
- Inflation in Europe is reaching 1.2%, below the 2% for which the European Central Bank had hoped.
- The EU added pressure to Prime Minister May to accept their suggestion of a softer exit, while the conservative party pushes for a tougher agenda.
- The EU stands firm that if the UK exits, it will suffer extreme economic consequences if it does not stay within EU law for the initial period.
- There is uncertainty over the USD’s depreciation if the US adds a planned 25% tariff on steel imports and 10% on aluminum.
IBC Members can download the complete Currency Outlook from the members-only section of the IBC website under the Special Reports section. IBC membership is free for all regular IHA members – to learn more and to join, visit the IBC membership information page.