The U.S. Dollar is trading in weaker ranges to begin this week following a holiday-filled period in which equities around the world improved along with other tenders.
Overview
The prospects of an ultimate end to tightening-driven monetary policy have apparently convinced investors better times will come as central bankers let a post-pandemic world march on its own.
While some inflationary concerns remain, markets have made peace with the idea that deflationary pressures are not needed for economic improvement. A more fragmented globalized system is not being unified by dollar strengthening, but rather thriving aimlessly even as almost the other half of participants fear worsening times into 2024.
Per some analysts, there is no real reason for markets to be riding this current wave of optimism. Fundamentals are dwindling and outlooks have some struggles ahead. We are cautious about looking too deep into the future but will be very monitoring statements and reactions for OPEC+, Fed commentary, as well as a few pieces of data such as the PCE Deflator on Thursday to make some forecast for what’s to come.
What to Watch Today…
- Fed Speakers Tuesday
- Euro-zone Confidence Wednesday
- Reserve Bank of Australia meets on Wednesday
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EUR
The Euro has been a big beneficiary of the dollar’s loss of momentum as it continues to flow around its strongest level since early August. Economic indicators have not impressed however and we wonder if the hot streak for the shared currency can remain. There is plenty to chew on this week with European Central Bank President Christine Lagarde speaking later today, confidence gauges come out on Wednesday, the Consumer Price Index on Thursday, and Manufacturing on Friday.
GBP ⇑
The Pound has been at its best level since the start of September, also enjoying the dollar collapse based on indicators that lead to believe looser monetary policy will come from the Fed. Without much in terms of data to digest, Sterling will be likely shaken most on Wednesday when Bank of England Governor Andrew Bailey speaks. At the moment, it feels like the year closing will be tumultuous as figures present us with situations across regions and aid in speculation over the measures to be taken next year.
