The U.S. Dollar is trading in mostly tight ranges, maintaining its weakest point overall since the last week of October, according to the Bloomberg Dollar Spot Index
Indeed, the Buck is starting off quietly ahead of the crucial Federal Open Market Committee decision on Wednesday, announced at 2PM and followed by a press conference with Chair Jerome Powell which is usually when the most FX volatility takes place. Ahead of the key risk event of the week, there will be plenty of data points to be released throughout today and tomorrow featuring previously unavailable figures from September and October as a result of the U.S. government shutdown. Today’s main feature will be inflation for suppliers in the form of Producers Price Index.
Global risk-appetite seems on the rise following good reports out of China revealing that November exports numbers came in higher than expected, but more importantly, the surge was due in part to the world’s largest economy deepening ties with the rest of the world while decoupling a bit from the U.S. Copper prices also rose to a record as the Chinese politburo explained that improving domestic demand will be top priority, thus there will be stimulus to push ahead and spend. We shall see how the possibility of diplomatic progress in Russia-Ukraine dealmaking can affect markets, perhaps affect Euro. A drought of data on the other side of the Atlantic will keep FX flows tied to American headlines.
What to Watch This Week…
- JOLTS Job Gauges/Layoffs Tuesday 10AM
- Fed Meeting and Press Conference Wednesday 2PM
- Monex USA Online is always open
CAD ⇑
The Canadian Dollar is rising in value, continuing its good run that has brought it to its strongest against the Buck since mid-September. The past two weeks have shown that the Canadian situation may not be as terrible as had been previously thought. Growth in Gross Domestic Product for Q3 was a surprising 2.6% jump when just half a percent was forecast. This also meant that the economy was able to overcome the contraction of (-1.8%) experienced in Q2.
Furthermore, last Friday’s Net Change in Employment saw an added 53.6K in November, totally opposite of the estimated loss of (-2.5K). The Bank of Canada will meet on Wednesday and announce their decision at 9:45AM, in which they are expected to be “hawkish” and pause interest rate cuts.
JPY ⇓
The Japanese Yen is currently the only major peer losing ground to the U.S. Dollar, down a bit after having improved to its best level since mid-October. Japan’s narrative has been mixed with the government talking about expanding expenditures while the Bank of Japan has commented on feeling comfortable with raising interest rates when they meet on December 19th. It feels counterintuitive for monetary policymakers to push for increasing borrowing costs after GDP in Q3 contracted by (-0.6%) in its final reading. November’s Producers Price Index and October’s Industrial Production will be items to watch this week.
