Daily Market Update

Overview

Additionally, markets are gearing up to finally be in full throttle after the return to activity in China following a week of observing the Lunar New Year. Some of the momentum behind the resurgence of currencies over the Buck is due to a sense of renewed optimism following the holidays in the world’s second-largest economy, which marked a revival in consumption as well as travel not seen since pre-pandemic times.

In terms of data, today and the remainder of the shortened business week will be very light, with the Fed Minutes from the January meeting coming out tomorrow being the most imperative domestic release. A few Fed members will be speaking both tomorrow and Thursday while earnings for major companies are digested as well.

While equities are having a moment, it is important to note that raw materials are dwindling, and economists are figuring out whether that is a good or bad sign for things ahead. After it was confirmed some major economies, including Japan, entered technical recessions, all focus will be on growth and the ability for recovery to match optimistic outlooks. The Dollar could see mixed swings as each region differs in well-being.

What to Watch Today…

EUR ⇑

The Euro is improving after some understandable downward moves following data pointing at difficult times in Germany and the Eurozone as a whole. While it does indeed look like the second half of 2023 was one of struggle and contractions, there is some hope on the horizon that a bottom has been reached and a growth spur is on the way. While not entirely dependent on China, it does help that stimulus monetarily and fiscally is being implemented there.

It also helps that the worry over energy will ease as Spring comes in. War in Ukraine has gone poorly, but there is renewed cooperation between European nations on how to address Defense concerns, even if the U.S. cannot be counted on for further military aid. As far as risk events, we will watch out for inflation in the form of the Consumer Price Index on Thursday, while European Central Bank executive board member Isabel Schnabel is scheduled to give remarks on Friday.

AUD ⇑

The Australian Dollar climbed by over half a percent and continues to be on a positive trend following overnight news, improving the picture for China in the short term. While it has been documented how extensively China’s housing sector has been a source of pain, Australian mining company BHP Group, which also happens to be the globe’s largest miner, gave a profit report slightly below estimates but assured investors that demand from China was “healthy.” Raw materials may start making a comeback and thus negatively affect USD.