The U.S. Dollar is trading in mostly favorable ranges as we close a week characterized by geopolitical headlines and a “hawkish” tilt from the Federal Reserve.
While Iran and the potential for armed conflict remains a dominant talking point, the macroeconomics of the week have also helped in improving the U.S. Dollar.
Thus far, it looks like the Buck may get away with approximately a 1.0% gain, especially after a big jump on Wednesday when the FOMC Minutes from the last meeting indicated there is little enthusiasm for lowering borrowing costs. Inflation could lead to eventually thinking hikes. This in turn contradicted market expectations and decreased the odds of a 25-basis-point cut by June to just 46.0%. Plenty of data out today may confirm that things are relatively steady while price growth remains thus establishing the Fed is right in its thinking and U.S. appreciation merited.
During the past two days, tensions have surged about Middle East military presence and how the region may reach a deal to avoid aggression of any kind. Today, the pressure seems to have eased a bit, and oil prices have stopped rising after reaching their highest cost per barrel in six months. We shall see if reaction to the economic indicators moves the needle much in a week also missing action from Asian markets enjoying the Chinese New Year holidays.
What to Watch This Week…
- U.S. PCE 8:30AM
- U.S. GDP Q4 8:30AM
- Monex USA Online is always open
EUR ⇑
The Euro’s fortunes have not differed much from its peers as the Buck has gradually recovered from a collapse experienced at the turn of the month. A shortened week within a shortened month has been packed with a mix of turmoil and surprises in scheduled economic releases. PMIs in the Euro-zone also demonstrated a better-than-expected picture. This weekend will be crucial to world affairs, it seems, so there are no breaks. Plenty of inflationary and confidence gauges will be out for the shared currency area next week.
GBP ⇑
The Pound Sterling has been losing to the Buck all week long but seems to be mounting a bit of recovery following some good news in the form of impressive data points. January reading of Retail Sales came in at 1.8%, expanding way more than the 0.2% estimate. Furthermore, there is some optimism across industries with S&P Global U.K. Purchasing Managers Index figures showing more expansionary responses than anticipated. While there is some political havoc in the air, it is not dampening GBP at the moment.
