The U.S. Dollar is trading in mostly tight ranges as markets seem to be cooling off in general as we enter the endgame for 2024 in the midst of stimulus promises and tariff talk
Overview
The former seems to be the planned antidote for the latter. China promised to slash interest rates and to also reach deep into their fiscal pockets to re-energize their economy and attempt to protect it form likely very negative effects if tariffs of 60.0% or more are applied on their exports. The globe seemed to welcome the news, but it may not be enough to counter what could be overwhelming barriers to trade. Although Wall Street is about to complete its best year since 2019, the enthusiasm across stocks and other assets such as crypto currencies is indeed fading.
The Buck remains strong, but it has slipped across many pairs thus far in December, affirming similar trends from the past when end-of-year volumes also make for gains in other tender. Inflationary figures tomorrow and Thursday will be crucial to officials as they meet mid-month with the Fed making its decision announcement on December 18th. On the 19th, we will hear from Bank of Japan, Bank of England, and Banxico down in Mexico. On Wednesday, the Central Economic Work Conference could serve as platform to details more about boosting spending and Thursday it is European Central Bank day.
What to Watch This Week…
- US CPI, Wednesday
- US PPI, Thursday
- BOC Decision, Wednesday
- ECB Decision, Thursday
- Monex USA Online is always open
EUR ⇓
The Euro is floundering ahead of the ECB meeting on Thursday expected to bring on further interest rate cuts. It is guaranteed that they will cut by another 25 basis points and there is a less than 10.0% chance they will go 50bps instead. Germany and France have seen their governments cause concern globally that the European Union may be coping with challenges that could threaten its single market structure. While the Euro is not reflecting the worries, we shall see how comments ahead of the ECB may prepare us for a more “dovish” take going forward.
MXN ⇑
The Mexican Peso is trading in favorable ranges, and it is defying the negativity that forced it to crumble in November. Ever since Thanksgiving, MXN has managed a 3.0% comeback in value. Although a lot of the tariff talk has been directed at Mexican goods and the will to change the current USMCA pact, Mexico’s fundamentals remain fine and the response from the leadership has been to look for cooperation where possible to avoid major issues as negotiations could take place, but not immediately.
