The U.S. Dollar is off to a strong start this year, climbing by over half a percent across the board.
Overview
Likely a slow week as people from all regions get back to normal routine following the holidays; we think this initial rally may hold until data points and activity resume. The biggest risk event will be on Friday when we get the release of the Employment situation.
Thus far, treasuries are off to a good start while equities look mixed with optimism over China yet concern over losses for big companies such as Tesla. Remember, the buck had 2022 full of swings that saw it reach its highest peak since 2001 but have witnessed plenty of losses ever since September.We have December data in the form of New Orders and Manufacturing tomorrow. Minutes from the last FOMC meeting will be out on Wednesday as well. We will keep an eye also on the news out of Ukraine/Russia, where attacks are intensifying. This could very well keep the buck afloat.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
Monex USA introduces OPTIONS
With currency exchange rates in a constant state of flux, companies transacting cross-border face the risk of losing substantial sums of money if they fail to hedge their exposure to these shifts. Monex USA now offers a wide range of FX options that could help your business better manage risk. Learn More
EUR ⇓
The Euro is down as traders and investors get back to their activities primarily focused on China’s potential for flourishing as well as the possibility of a recessionary period for the U.S. and the Eurozone. The mixed feelings are likely going to keep Euro under pressure this week. Nevertheless, there are positive items that could cut the shared currency’s losses.
Germany’s North Westphalia region saw a dip of a full percentage point to its inflationary gauge, suggesting that the European Central Bank’s policies are working to an extent in cooling down price growth. Additionally, we welcome the World cup bronze-medal winner Croatia to the Euro-zone as a brand-new member of the monetary union.
GBP ⇓
Sterling is also down to begin 2023 based on fears of a dire economic outlook. The pound lost 10.0% of its value throughout last year as the country struggled with leadership and faced a political crisis not expected from one of the most stable democracies. GBP was the third worst-performing major currency.
There is a lot to be scrutinized going forward, but if the U.K. avoids the deep recession feared, times ahead could mean more room for Pound strength.
