The U.S. Dollar is trading in more favorable ranges this morning following the release of some data points that point to ongoing economic growth as well as price growth.
Overview
Core Personal Consumption Expenditures climbed 0.2% and Personal Spending rose 0.2% after having contracted (-0.3%) in September. PCE advanced 3.5% from where it was a year ago. Altogether, this bodes poorly for those in markets, particularly in equities, hoping for Federal Reserve cuts within the first two quarters of 2024.
Additionally, the Bloomberg Economic Regime Index, a measure of how unfavorable the economy is viewed, showed that the U.S. may have passed the worst of its economic pain after some pessimism had built last month. FX flows may also be influenced by a riled-up oil market waiting for the final say by OPEC+ on supply cuts after some internal discord that has made meetings tense. Overall, the buck is trying to recover some ground and finally has some items to merit it.
What to Watch Today…
- U.S. Construction Spending Tomorrow
- Euro-zone Manufacturing tomorrow
- Monex USA Online is always open
EUR ⇓
The Euro is coming down from its middle-of-summer vibes and levels after data from the Eurozone pointed to faster disinflation than expected. While the Consumer Price Index rose 2.4% from a year ago in November, it came short of the estimated 2.9%. In terms of talks about pivoting to a more dovish approach to monetary policy, this makes it seem likely that the European Central Bank will take away any chances of hiking interest rates again if inflation is cooling on its own. In comparison to the Fed, the ECB may need to look at underwhelming economic figures and perhaps pivot faster than any other major central bank. Once again, the doubts and dark clouds over the Eurozone are gathering.
GBP ⇓
Although Sterling is headed downward, the news out of the U.K. continues to be on the side of keeping interest rates higher for longer. Following further confirmation from central bank figures such as BOE Governor Andrew Bailey, major banking firms are seeing more business activity and are prepared to adjust to the hawkish tone. The pound could be significantly dented if economic figures sour, but for now, the buck is just slightly improving.
