The U.S. Dollar is trading in favorable ranges across the board as the long weekend in the U.S. served as a boost to the Buck and other assets
Overview
It is important to note that the S&P 500 and Nasdaq 100 actually slipped after a tremendous jump following the U.S. elections and the quick result. As of now, the Bloomberg Dollar Spot Index is at its strongest point since November 2022. Most investors and traders are still adjusting their bets on just how much protectionism may come up with tariffs and other proposals from incoming Trump officials.
There are growing doubts that the Fed will get a chance to be very loose with monetary policy as inflationary pressures may arrive from new trade proposals. The current chances of a 25-basis-points cut for the Fed December 18th meeting are just at 65.0%. We feel more clarity will come in the upcoming weeks as the cabinet for the administration is staffed and there is more discussion about plans. Throughout the shortened week, we will hear from some Fed officials, and get inflation figures tomorrow while we wait to chew on some data Friday in the form of U.S. Retail Sales and Industrial Production.
What to Watch This Week…
- Euro-zone GDP on Thursday
- US CPI on Wednesday
- US PPI on Thursday
- Monex USA Online is always open
MXN ⇓
The Mexican Peso is back down to its lowest value against the dollar since August 2022. After the U.S. election, traders have been wondering if Trump and his possible choice in trade-hawk Robert Lighthizer will look to make changes to the USMCA trade pact and put “Nearshoring” for Mexico at risk. We will have a very light week for data points so much of the volatility and turbulence for MXN will come from headlines concerning its trade status.
EUR ⇓
The Euro is currently trading at its weakest point since November 2023, losing ground as the Buck improved based on the idea that the Fed may not be able to cut into interest rates as markets had figured. Improved indicators in the Euro-zone have kept the currency afloat, but the rally for the Buck is overshadowing any of the optimism that has been building behind Europe’s recovery. We will get a chance to analyze Gross Domestic Product figures from the third quarter on Thursday.
