Daily Market Update

Dollar up for January, event risks still ahead

January 30, 2024

The U.S. Dollar is trading in mostly tight ranges ahead of a much-awaited Wednesday that features the main risk event of the week in the Federal Open Market Committee and subsequent presser.

Overview

Already, jitters across markets are showing, with some analysts hoping to hear Powell give some clearer guidance. It is clear that the economy is strong, but it is a split camp regarding the odds of a cut to interest rates by the first half of the year.

There is also plenty of data to chew on for the week. Later today at 10 AM, we get a look at Conf. Board Consumer Confidence, which is expected to show improvement from the end of last year. ADP Employment, which can sometimes serve as a preamble to the real Employment Situation, is out tomorrow at 8:15 AM before all the commotion over U.S. monetary policy gets going at 2 PM. We think volatility will naturally be at its highest midway through the day tomorrow. For now, we will watch for any headlines from elsewhere that can move the needle.

What to Watch Today…

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

View Economic Calendar

 

EUR  ⇑

The Euro is muted like most other tender this morning, but it must some key figures must be pointed out. The Euro-zone surprisingly avoided a recession as fourth-quarter Gross Domestic Product numbers came in at 0.0% instead of the predicted contraction of (-0.1%). German economic troubles continued with negative data, but France held the major economies and grew some in comparison to the year prior. While we have written about the European economy already bottoming and ready to spur a comeback, the pressure is on now to see stronger figures going forward or risk the shared currency paying a major toll. It will become harder and harder for the European Central Bank to delay cuts to borrowing costs.

GBP ⇓

Sterling is down after another bit of evidence that prices are, in fact, significantly slowing down after rounds of tightening. According to the British Retail Consortium, prices at shops climbed by 2.9% in January, way lower than the prior month at 4.3%. Inflation fell to its lowest in 18 months, per the figure. We shall see if the Bank of England remains hawkish or if there is enough room for them to consider pivoting. Thus far, the message is to keep rates higher for longer.

 

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