The U.S. Dollar is trading lower against the majority of it’s G10 peers this morning
Traders are continuing to digest the impact of the Fed’s interest rate cut on Wednesday, but broader market sentiment is becoming more positive and has gotten a boost from ebbing inflation concerns. While traders perceive a slightly less than 1-in-4 chance that the Fed will cut again in January, there is a significant amount of previously delayed economic data that will be released ahead of the January policy meeting that could impact decision making, such as the inflation and payroll data for November, and partial data for October, coming out next week.
U.S. jobless claims came in higher than expected yesterday printing at 236k vs 220k expected for the week ending December 6th. Traders soured on the news but quickly changed course and drove 10y yields to 4.16% after it was announced that the Fed Board unanimously reappointed eleven Fed regional presidents to new five-year terms, retiring Atlanta Fed President Bostic being the only exception.
What to Watch This Week…
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CHF ⇑
The Swiss Franc is the G10’s second best performer this morning. The Swiss National Bank elected to hold their interest rate at 0% yesterday, as expected. There has been concern as of late that the Swiss Franc has appreciated too quickly as it continues to trade near historically strong levels, but SNB Chair Schlegel has indicated that they will not be returning to negative interest rates for the time being, which has subsequently increased the likelihood of direct intervention.
CAD ⇑
The Canadian Dollar is the G10’s best performer this morning as it continues to trade near its best level since September. The Bank of Canada made the decision to hold interest rates at 2.25% on Wednesday, and the Loonie has received plenty of support as a result. Canadian CPI numbers will release on Monday, where we expect inflation to remain sticky, around 3.0%.
