The U.S. Dollar is trading in slightly weaker ranges across the board, as the movement against currency pairs has subsided from the wild swings experienced in the days since the U.S. election
Overview
Overall, the Buck is settled around its best levels in two years. The re-strengthening has been due to concerns that tariffs that could be introduced in the next year will actually add to U.S. inflationary pressures.
Subsequently, that has lowered the chances that the Fed remains focused on slashing interest rates as these moves can also make price growth even more rapid. October Consumer Price Index figures released this morning revealed annual inflation average at 2.6%, above the 2.4% registered in September.
The odds of the Fed even acting in December have declined. At the time of writing, chances of a 25-basis-points reduction were just above 50.0%. We have the supplier side of inflation in the form of Producer Price Index out tomorrow along with jobless claims, while on Friday we get Retail Sales and Industrial Production. We will also hear from Fed members, but all eyes will be on headlines regarding possible changes to trade. Chinese data out end of the week may also move the needle.
What to Watch This Week…
- Euro-zone GDP on Thursday
- US Industrial Production on Friday
- Monex USA Online is always open
MXN ⇑
The Mexican Peso’s weakening has slowed down after the tender hit its lowest value since August 2022. MXN flows have been all over the place as speculation over trade policies to arrive under Trump have added to worries about the relationship between Mexico and the U.S. being disrupted and affecting supply-chains. We feel nothing is guaranteed and this volatility will remain until there is more guidance on actual plans of action
EUR ⇑
The Euro has calmed down a bit following a rapid slide as markets have been adjusting for potential to loose monetary policy from the Fed to come to an end sooner than had been anticipated. Things on the other side of the pond are not terrible though and we will find out if growth has remained on the surprising upside with the release of Gross Domestic Product tomorrow. The glance at third-quarter performance will also be accompanied by September Industrial Production, which is expected to contract. If an expansion is revealed, the shared currency could experience some gains. While there have been some forecasts calling for Euro-Dollar parity, we believe this is based on panic and not fundamentals, which are stable.
