The U.S. Dollar is trading in familiar ranges to start off the week as markets eagerly await the Federal Reserve’s decision meeting on Wednesday.
Overview
Following weeks of speculation that the Fed is willing to slow down the pace of hikes as well as data serving as evidence of a resilient but not-too-hot economy, markets have only one way to see if the Fed will budge. Thus far in the year, the buck has declined by 2.0% in value per the Bloomberg Dollar Spot Index.This week will be characterized by central bank action, or inaction, and how investors and traders react to it. Once their speeches are done by Thursday, the monetary policy guidance shall give us a chance to assess if our outlooks for a flourishing second half of the year and weakened buck materialize. A plethora of economic data gauging economic growth will also define the direction of currencies.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
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EUR ⇑
The Euro kept its gains as the Davos Economic Summit ended, and statements from European Central Bank officials signaled a desire to continue to hike interest rates. Recent economic numbers have pointed at a better-than-expected situation in the Euro-zone with a resurging stock market looking hopeful that the remainder of the year will be of improvement.We are expecting the Gross Domestic Product data tomorrow, Producer Price Index as well as Purchasing Managers Index on Friday, and the ECB decision on Thursday. Unfortunately, inflationary data out of Germany scheduled for tomorrow will not be printed after it was announced they faced a technical issue. We shall see how this is addressed and if it affects the ECB this week.
GBP ⇑
Much like most currencies today, the Pound is not moving much as we await risk events to take place. Recessionary fears in the U.K. will keep all eyes on Andrew Bailey’s press conference Thursday post-meeting. We feel that central bankers could make different cases for themselves as each region faces different levels of instability while sharing cautious optimism about the year ahead.
