Running of the Bulls?
MosaicaFX makes a concerted effort to provide our clients the most accurate information to assist them in making the right decisions for their business. Lee Iacocca is attributed with saying, “…there are no small decisions in business, just small business decisions.”
For that reason we know that sometimes it is important for you to be provided a wide swath of information that may not be highly detailed. If there is a fire in your building…you just need to know where it is, not necessarily how hot it is burning. With that in mind, we thought we would touch on a few hot currency updates that you may need to know.
Will the U.S. Dollar Sink or Swim?
The Greenback appears to be treading water right now waiting to see what action the Fed signals it is considering in the near future. The Dollar has steadied since hitting six-months lows last week and it appears that we can expect the USD to not demonstrate any abrupt movements (up or down) until or unless (a) the Fed’s meeting minutes incite more trepidation and (b) the current Administration is pulled into more controversy.
Don’t get Moody about China…
Global markets seemed to shrug off a move by Moody’s Investors Service to downgrade China’s sovereign credit rating by a notch. China’s response was measured and low-key to the Moody’s bearish move on their ratings. Many currency traders slowed their interest in the Yuan until the global markets get a firmer grip on what this Moody move will actually mean in the short term.
Euro Cashes Out Over the Last Few Days
It appears that the Euro has eased below its six month highs against the Greenback due to traders pulling profits in anticipation of the minutes being released from the last Fed meeting. Now that France will evidently be solidly behind a European single currency for the foreseeable future, it is expected that the Euro will continue to trend in a positive direction. At this point the Euro seems to be on stable footing.
Stirring the Sterling!
The Sterling seemed to stabilize a bit as the major currencies waited to find out what the Fed’s notes foretold from their meeting earlier in May. However, the Pound ran into some headwinds since sailing to some eight month peaks over the past week. Internal polls in the UK also show that frontrunner Theresa May’s lead is shrinking ahead of Britain’s general election on June 8th. The long term is expected to remain favorable for buyers of the pound with the Sterling still far below the pre-Brexit referendum levels of around 1.47….yet far above the 31-year lows of 1.15 of last October.
Loonie for the Loonie?
The Loonie has charged back nearly 2.5% from a 14-month cratered low touched in early May of near 1.38. This is due to both a “lift” effect from the weakening Greenback and due to bullish oil prices of late. This week OPEC is expected to extend their production cuts which will only help to bolster shale oil prices and Canadian deep well oil prices as well. This effect can only help to continue the Loonie’s rebound.
The Bottom Line…
MosaicaFX expects the Dollar to remain fairly constant at least until the next Fed meeting on June 14th when a decision will be made on whether to raise interest rates (unless of course more political intrigue occurs). The Fed Chair has expressed some optimism in the current U.S. economic state of affairs and conventional wisdom portends that the most unsettling news to affect the Greenback is based on political and not economic or financial issues.
Therefore, we would strongly advise that you partner with a currency management company that will provide ongoing and accurate overviews on the volatile currency markets. It is only through experienced input will you be able to protect your profits and develop sound currency strategies moving forward.
Make an appointment with one of our Executive Account Managers today so we can explain our latest hedging and option strategies to you. We are accepting a limited number of new clients at this time and would like to explore this opportunity with you.