The U.S. Dollar plummeted this morning to start the week with its biggest downfall since November 2023
Overview
A report overnight explained that aides to incoming President Donald Trump are working on narrowing the scope of tariffs to be levied in his reign. Apparently, the focus will be on imports of critical importance, so the blanket approach to increasing tariffs on all products seems to not be the target. The markets are welcoming the news with traders believing an agenda with less barriers to trade will bode well for the economy. U.S. treasuries are cutting their losses while equities are looking to bounce back for a second day after a stellar recovery on Friday.
Today, we have Fed Reserve Governor Lisa Cook speaking at an event at the University of Michigan where her comments will be closely monitored. Richmond Fed President Tom Barkin said on Friday that restrictive interest rates should stick around much longer. Data-wise we have a S&P Purchasing Managers Index for December out at 9:45AM while November Factory Orders will be released along with Durable Goods Orders at 10AM. On average, the Buck is down by over 1.0% against most currency pairs.
What to Watch This Week…
- Euro-zone PPI, Wednesday
- US Nonfarm Payrolls, Friday 8:30AM
- Monex USA Online is always open
EUR ⇑
The Euro is mounting a comeback as are other peers after news that Trump’s tariff schedule may not be as extensive and wide as has been anticipated recently. If indeed only items of critical importance are the focus, industry leaders can breathe a bit in preparing for adjustments to new taxes on products. Overnight, traders also decreased their bets on the European Central Bank’s path towards loosening their policy and slashing interest rates aggressively. Already, there have been a few positive signs that growth can remain steady, which takes apart arguments for Euro parity to the dollar early in the year.
MXN ⇑
The Mexican Peso is climbing out of a hole that saw its value sink to the lowest point since Summer 2022. Although Mexico has a lot to be concerned with if Trump looks to do more than just renegotiate the USMCA trade pact, MXN as well as Emerging-Market currencies are taking advantage of the good news behind the idea of tariffs having a lower impact than what is being predicted by analysts across financial institutions. December inflation in the form of Consumer Price Index will be out on Thursday.