Dollar Mixed but Data Optimistic

The US Dollar is trading in mixed ranges this morning amidst easing geopolitical tensions and optimistic economic data.

Updates regarding the Greenland have been scarce since the conclusion of the Davos summit, but multiple press outlets have reported that President Trump’s reported framework centers on reviving the 1951 Greenland Defense Agreement between the US and Denmark. Strong economic data yesterday, most notably Initial Jobless Claims, has also helped to shift sentiment.

In terms of new data, we will be receiving January’s Purchasing Managers Index (PMI) numbers later this morning, which are expected to show broad economic expansion across both the manufacturing and services sectors. PMI will be closely followed by the University of Michigan’s Consumer Sentiment Index as a secondary release, which is expected to be optimistic and show that consumers are slowly becoming more optimistic on the economy.

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GBP ⇑

The British Pound is the G10’s best performer against the Greenback this morning following strong PMI and retail sails figures out of the United Kingdom. This indicates emerging economic resilience and positively shifting sentiment despite a generally weaker labor market and consequently weakens the argument for an interest rate cut by the Bank of England at their March policy meeting.

JPY ⇓

The Japanese Yen is down against the Buck this morning after the Bank of Japan voted to hold their policy rate at 0.75% overnight. While the decision was widely expected, the Yen slid more than a percent immediately following the release, before retracing slightly. Traders are whispering about the potential for intervention, but the Yen did not decline sharply enough here to warrant such a move. That does not rule out the possibility of intervention in the future but expect high volatility for the time being.

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