The U.S. Dollar was trading in mostly tight ranges with Gross Domestic Product and Consumption data coming in with expected readings, but announcement by the U.S. President of tariffs next week hit the newswire at time of publication
Overview
The second reading of Q4 GDP showed that the American economy grew 2.3% as originally measured, but Personal Consumption was revised slightly from 4.1% to 4.2% January Durable Goods Orders experienced a bigger jump than estimated at 3.1% instead of 2.0% Initial Jobless Claims for last week did increase more than thought at 242K vs. 221K. Overall, the labor sector seems to be experiencing some turbulence, but consumers are keeping the situation far from a dire scenario by continuing to spend in the face on stubborn inflation and concerning headlines.
Markets are also still digesting talk from yesterday’s White House cabinet meeting and statements that seemed to conflict with expected plans for tariffs. While saying tariffs will apply to many products, members and the President later said it could be just some specific industries only. As negotiations continue and no implementation is set out, trade will remain blurry and long-term planning challenging. This week, Buck has seen little movement as guidance is hard to gauge. The preferred inflation measure by the Fed in the form of Personal Consumption Expenditures will be out tomorrow.
What to Watch This Week…
- PCE Price Friday 8:30AM
- Monex USA Online is always open
Complete Economic Calendar can be found here.
EUR ⇓
The Euro dropped by half a percent immediately after an announcement that tariffs would be implemented on March 4th against China as well as North American partners. There is not much in terms of details and clarity over Europe, but it seems like there will be some trade barriers to deal with. A quiet morning following positive mood across risk markets because of good earnings reports has been smacked live with the breaking news that there is intention to put a tax on trade products. As always, this also comes with retaliation which may lead to negotiation as well as termination of the tariff threat.
MXN ⇓
The Mexican Peso is losing ground as the U.S. economic indicators looked solid for today and announcement at the time of writing that tariffs would be applied to imports from Mexico on March 4th. We shall see if this development continues to sink Peso or if something changes rapidly. Without numbers to chew on, these headlines will keep FX movements interesting.
