The U.S. Dollar is trading in slightly stronger ranges this morning following yesterday’s release and the reaction of the Fed Minutes from their last meeting.
Overview
Surprisingly in their notes, Fed officials noted frustration with outlooks and forecasts out there already accounting for interest-rate cuts for the second half of 2023. In their view, inflation and demand need to be brought down, and they warned investors about taking cuts for granted.In fact, they say any changes from the current contractionary approach are not coming soon, and they are determined to keep rates as a tool for cooling down the economy. It was the clearest expression yet from the Fed warning that they are not switching stance.Earlier, the release of ADP Employment change for December revealed an expansion of 235K payrolls, exceeding the expectation of just 150K. Continuing Jobless Claims also came in lower than expected, along with Initial ones. As long as labor is strong, demand will remain high, inflationary pressures will continue, and the Fed will see the need to hike interest rates further. While the buck is not rallying aggressively, it has certainly hit the brakes on all currencies across the board.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
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EUR ⇓
Although Euro is down today, there is positivity behind the currency as an assessment of the energy situation has satisfied European leaders. As the year goes on, expectations are that many of the feared bad times during 2022 will not materialize in 2023, and there is hope that the conflict in Ukraine will end in a stalemate or some negotiations. Analysts are adamant that the current state of affairs is unsustainable, which will only mean that Russia will want to rejoin the globe at some point. We will get economic data points in the form of Retails Sales and Factory Orders tomorrow.
CAD ⇓
The Canadian Dollar is losing ground after having the second-best performance amongst the majors yesterday, surprisingly up following the Fed Minutes. Canada’s situation is helped by a more confident globe that is taking China’s word when it comes to recovering economically no matter what. Signs of wanting to import more coal form Australia added to the idea that China will be more of a factor in production and trade that could impact inflation in a desirable negative way.
