Daily Market Update

Dollar quiet ahead of Fed at 2 PM

January 31, 2024

The U.S. Dollar is trading in tight ranges all across the board ahead of the momentous Fed meeting to start the rest of the year.

Overview

Indeed, the questioning that will follow the announcement by the committee will be closely watched as markets are already pricing in lowered chances of cuts for the first quarter in comparison to the end of last year. The economy keeps rolling, and it does not seem to be in need of stimulus.

The labor sector remains strong, with January ADP Employment Change showing an additional 107K vs. 150K expected, but with a revised number for last month of 158K. Volatility will be high as we believe markets are still a bit too stubborn about just how dovish the year will turn out to be. As of now, the odds for a cut by the March 20th meeting stand at 51.3%. We feel the indication will be to keep things as they are beyond Summer. It could play out to be a dollar booster.

What to Watch Today…

  • Bank of England Thursday
  • Euro-zone CPI, Friday
  • US Nonfarm Payrolls, Friday 8:30 AM
  • Monex USA Online is always open.

View Economic Calendar

 

EUR  ⇑

Movement has been relatively limited ahead of major data as well as central bank action. The Euro is not recovering much, but it is at least no longer losing ground. Tomorrow’s inflation in the form of Consumer Price Index for January will be a likely mover for the shared currency. Statements from their January 25th meeting did make it seem like the poor data trend may force their hand in cutting interest rates before the Fed does. Later, we will have a more concrete version of how divergent things truly are between financial authorities here and there.

GBP ⇑

Without much else in the horizon until data points hit and statements are made from key figures, FX flows will remain subdued. Tomorrow, the Bank of England gets a chance to explain their side and make a case for not making changes to rates anytime soon. As far as inflation is concerned, Houses remained on the rise with the Nationwide House Price Index climbing by 0.7% when only a slight 0.1% uptick was estimated. Stagflation, prices rising, anemic growth, seems to be the theme in the U.K.

 

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