Daily Market Update

Overview

After a tumultuous week with plenty of data chewed and digested for its significance on future monetary policy domestically and elsewhere, most currencies experienced losses to the Buck across the board. In fact, Mexican Peso managed to stay unmoved thus far along with Chinese Yuan during what was an entire week of celebration over the Lunar New Year. Meanwhile, next week will be a shortened one for us as we observe Presidents’ Day on Monday.

Data-wise, inflation in the form of Producer Price Index figures for January revealed a stronger monthly climb than expected, thus bringing up the annual average from 0.6% to 0.9%. The battle against inflation is not over until it is over. In terms of Housing and Building Permits, Housing Starts came in lower than expected, further adding to concern that even if a scenario developed in which borrowing costs were lowered, affordability is an issue with no growth in supply, particularly single-family units. At 10 AM, the University of Michigan CFB Champs Survey on Consumer Sentiment will be released. The gauge has been showing an improving positive mood since June.

What to Watch Today…

EUR ⇓

The Euro lost a bit of ground throughout the week after data pointed at continued trends of growth in the U.S. while stagnation, and regression, take hold on the other side of the Atlantic. We will get a chance to analyze more out of the Euro-zone next week with Asian markets fully vested as well as key data coming out for inflation and growth. Consumer Confidence will be out on Wednesday, February Purchasing Managers Index on Thursday along with January’s measure of Consumer Price Index. While nations have evidenced plenty of struggle and some have entered recession, Euro could surprise with upticks as economists and officials point at data that is attempting to paint a picture of recovery and wage expansion.

JPY ⇓

The Japanese Yen was the worst performer among majors for the week, losing about 1.0% of its value thus far. After statistics confirmed a second half of 2023 marked by contraction, Japan entered a technical recession despite the Bank of Japan’s determination to safekeep an ultra-loose financial environment with interest rates in negative territory. This will give BOJ officials more to ponder about, but we believe that eventually the leaders will push to at least get the benchmark rate back up to 0.0% Once this occurs, the dollar will lose plenty, but for now we will just patiently await for a change of mentality and action as has been speculated for over year and a half. Trade woes in the Red Sea and need to transit down in Cape Town, South Africa have made the exports-driven economy filled with challenges unforeseen.