The U.S. Dollar fell further this morning to close out a week of losses of around 1.3% in overall value as uncertainty over trade barriers did not translate into typical safe-haven Dollar gains.
Overview
Mixed market signals are keeping traders and investors on edge as everyone is trying to price in policies and tariffs to come.
Treasury yields rose, equities floundered a bit, all a roller-coaster ride as earnings and geopolitical developments had to be digested in an eventful week. One take that seems to be optimistic, but gaining some consensus, is that if some sort of peace or ceasefire can be achieved in Ukraine, it could represent a turnaround for global growth. Ultimately, this bodes poorly for the value of the U.S. Dollar, which is nearing a 2.0% downfall thus far for the year.
As a result of inflationary pressures, consumption in the U.S. is starting to show signs of dwindling with January Retails Sales figures contracting across every category, not even expanding by 0.3% as predicted when excluding volatile energy and food costs. Instead, Sales fell by (-0.5%). A silver lining came in the form of Industrial Production, which grew half a percent vs. 0.3% last month. Again, when looking at data and market behavior, things are lacking clarity. We will have a long weekend to ponder on it all as Monex USA is closed on Monday in observance of the Presidents Day holiday.
What to Watch This Week…
- Monex USA Online is always open
Complete Economic Calendar can be found here.
GBP ⇑
Sterling is among the best performers this week against the Buck with a 2.0% appreciation. The good fortunes for the Pound have been based on better-than-expected data as Gross Domestic Product figures yesterday improved the outlook for what may come in 2025. The U.K. government is hoping to add expenditures aimed at boosting business as well as ending a long period of austerity on services assisting the population. December’s 0.4% expansion, four times what was forecast aided in bringing up the yearly GDP average from 1.1% to 1.4%, and that’s after Q4 2024 showed it was a time of struggle saved by enthusiasm and productivity during the holidays season. Next week, we will have a look at inflation, which if down as estimated could move GBP further.
MXN ⇑
The Mexican Peso is up 1.5% for the week after markets embraced the announcement of tariffs as another opportunity for Mexico to negotiate with the White House. Mexican President Claudia Sheinbaum has been applauded for being able to meet the U.S. President in some concessions and maintain an open dialogue to foment the similar warm ties that Trump formed with AMLO in the first term back in 2017. USMCA was revamped after NAFTA changes, so market watchers are thinking she will be able to manage demands and adjust accordingly. Regardless of the friction in trade, the central bank, Banxico seems ready to aid the economy as recent figures have pointed at contraction to Industrial Production as last year came to an end. Volatility remains high for the currency, but it is surprising in its ability to stay buoyant
