The U.S. Dollar is trading in mostly familiar ranges to start a week marked by confusion over U.S. trade policy and challenges to economic activity as a snow blizzard hit the Northeast.
Friday turned out to be a crucial day as investors and traders reacted to the news that the U.S. Supreme Court decided on the legality of tariffs and reached a 6-3 vote to declare the measures illegal.
Over the weekend, this development has companies wondering if their lawsuit will result in refunds or if there will be other challenges to confront as the White House announced an executive order establishing a global 15.0% tariff using yet another legal avenue, but one that is limited for about four months until Congress has to decide if applicable going forward. Overall, the Buck only gained about half a percent last week, per the Bloomberg Dollar Spot Index after suffering most of the attained ground on the Friday session.
More importantly, there is evidence pointing at a weakened economic situation domestically after Q4 GDP readings revealed much lower progress than forecast 1.4% annualized average, half of the 2.8% estimated. Meanwhile, “stagflation” was solidified with stubborn inflation as the Fed’s preferred measure in Personal Consumption Expenditures jumped to a yearly average of 2.9% from 2.8% after rising 0.4% vs. 0.3% in December.
The odds of a 25-basis-point cut by the Fed at their June 17th meeting stand at 37.0% after hovering around 52.0% last week. Data-wise we have December Factory Orders and Durable Goods Orders out at 10AM. Remainder of the week does not have much to offer in economic indicators other than confidence gauges, jobless claims and supply-side inflation in the form of Producers Price Index for January on Friday.
What to Watch This Week…
- Factory Orders and Durable Goods 10AM
- Conference Board Confidence tomorrow 10AM
- PPI January figures Friday 8:30AM
- Monex USA Online is always open
EUR ⇑
The Euro is trading tightly, barely moving thus far this month, holding on to a small gain just above three tenths of a percent. We are watching for talks about countering U.S. tariff policy determination while also watching for how the Middle East tensions can impact European activity with Bren Crude oil fluctuating wildly in recent weeks. On Wednesday, we will get CPI for January followed by Economic, Industrial, Services, and Consumer Confidence gauges. In Germany, things are already looking a bit more optimistic than thought after IFO Business Climate as well as Expectations were more positive than predicted.
MXN ⇓
The Mexican Peso is down nearly by half a percent this morning after a devastating weekend for the country after facing violence from cartel members avenging the death of a major drug lord known as “El Mencho.” Authorities have been trying to calm the situation after some airports and other infrastructure were attacked and set on fire. We are closely monitoring what is occurring and hoping for betterment and no casualties. Macroeconomically the week was supposed to be packed with important data Q4 GDP today coming in better than anticipated at 1.8% vs. 1.6% annualized while tomorrow we get Consumer Price Index numbers. Expect a lot of volatility as the days progress and issues are addressed.
