Oblivious
Material economic and political developments are afoot once again and there is a convincing argument to suggest the FX market is disregarding the lion’s share of them. Firstly, on the economic front, the Dollar has remained relatively unperturbed despite severely underwhelming soft data. The surprise came from the host of purchasing manager’s indices released earlier this week. Whilst the absolute level of these PMIs remained largely tolerable, the rate of decline in consumer and business confidence in the United States should be alarming. This risk has yet to materialise in the price of the Dollar.
What is perhaps more surprising is that PMIs this week have shown Eurozone sentiment to be notably resilient. Dig below the surface and it is evident that despite strong European soft data, the trend of a divergent Europe continues. Political headwinds in France continue to drive PMIs between German and France wider. Credit spreads show that this risk still appears to be contained, however, this could still be a potential reason why EURUSD has failed to climb higher. Perhaps also there is cause to be found on the political front.
Trump has drawn headlines during this week’s UN meet. Of most relevance to markets have been Trump’s comments regarding Russia and Ukraine. In particular, the President’s suggestion to EU nations about how they should deal with incursions by Russia in sovereign nations’ airspace and the suggestion Ukraine could reclaim all of its occupied territory, could materialise as downside risks to European currencies. This is because, if heeded, such suggestions would raise regional risk at the likely detriment to currencies including the Euro.
Discussion and Analysis by Charles Porter
Related Insights
Daily Brief – Sterling defence
Charles Porter
Tue 28 Apr 2026
Sterling defence Options markets are flashing warning signals for Sterling. It’s no secret that the forthcoming Bank of England monetary policy decision later this week poses a risk for the Pound. However, there are risks mounting further afield. The local elections on May 7th are a material risk for GBP, for example, with traders concerned the […]
Daily Brief – Cancelled Travel Plans
Charles Porter
Thu 23 Apr 2026
Cancelled Travel Plans No, this time not because of the impending jet fuel crisis threatening continental travel as we discussed yesterday. Instead, I’m referring to the grounding of Vice President Vance whose trip to Islamabad, Pakistan was cancelled on Tuesday to avoid embarrassment. The Vice President was expected to travel on Tuesday to resume talks […]
Daily Brief – TACO or MACO?
Charles Porter
Tue 21 Apr 2026
TACO or MACO? On Friday markets received headlines of the supposed conclusion to the closure of the Strait of Hormuz. Despite the vast consequences of military action upon the region and beyond, it has repeatedly been the Strait that has been cast as the epicentre of economic (mis)fortune during this war. Therefore, the initial reaction […]
