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 – Missing haven
Charles Porter
Tue 7 Apr 2026
Missing haven At the start of the year, the Franc had performed well as a safehaven. As a result of political and economic developments in Japan, the Yen was not abiding by its usual safehaven form. Therefore, defensive plays within FX only had two credible places to go: the US Dollar or the Swiss Franc. […]
Daily Brief – Battle of the banks
Charles Porter
Thu 2 Apr 2026
Battle of the banks Market volatility continues amidst unclear messaging from both sides of the conflict in Iran. The President’s position has continued to flit between seemingly concrete positions of absolutely tangible progress and bombing the nation back ‘to the Stone Ages’. Since the start of the war, smarter money has acknowledged that predicting the […]
Daily Brief – Questioning Truth
Charles Porter
Tue 24 Mar 2026
Questioning Truth Adopting the same handle as his now rather redundant X account, @realDonaldTrump shocked markets yesterday using his own social media platform, Truth Social. During Trump 1.0, the legitimacy of a President using an unofficial X, then Twitter, account was questioned. Now under Trump 2.0, it’s seldom questioned when he is the majority shareholder […]
