The U.S. Dollar is trading in much stronger ranges mid-week than how it started as market anxieties grow over potential for tariffs and higher inflation to come globally
Overview
The global bonds market is having a moment as they have been under pressure as the American economy continues to advance while stubborn inflation makes it less likely interest rate cuts will arrive in bunches in 2025. Robust yields in the past few days have driven investors to that market, which will close early today at 2PM while the stock exchanges are shut in observance of the federal holiday to honor the late President Jimmy Carter.
Non-Farm Payrolls and the Employment Situation will close out the week tomorrow. The expectation is low for December figures, 165K, after a boost of 227K jobs added in November. Anything higher or beyond 200K could spark an even stronger dollar move. Recent comments from Fed members indicate they do not see much of a need to slash rates, aiding the Buck’s steadiness and positivity further.
Review our Annual Currency Outlook for additional insights into FX Trading for 2025!
What to Watch This Week…
- US Nonfarm Payrolls, Friday 8:30AM
- Monex USA Online is always open
GBP ⇓
The Pound is weakening as there is an ongoing selloff of U.K. assets all across the board with concern that economically the country needs very robust stimulus and rate cuts. Indeed, recent data showing that the last third of 2024 was mired in contractions has convinced traders to place bets on more than four rate cuts to come form the Bank of England this year. Sterling is already trending towards 2023 lows against the Buck. 10-year treasury bond yields went to the highest level since 2008.
MXN ⇓
The Mexican Peso is also down against the Buck, but it has steadied as inflationary gauges came in lower than expected. The annual average for Consumer Price Index came in at its lowest in four years, showing that interest rate cuts from Banxico have successfully avoided bringing up prices while promoting a friendlier financial environment. Although there is worry about the possible impact if new tariffs are to arrive, seems like the central bank has room to still be loose in its monetary policy while awaiting economic expansion from the low borrowing costs.
