The U.S. Dollar is trading in familiar ranges as global markets continue to try finding direction as central bank tightening seems inevitable.
Overview
Bond markets yields continued to go up until Friday, but in general, seem to be cooling down. Equities were all over the place last week and the CBOE Volatility Index was close to its highest level for a month since February 2020. There are more earnings this week and central bank decisions ahead that will impact markets and give clearer guidance of what may be ahead.On the geopolitical front, last week’s warnings by the State Department continued regarding the situation in Ukraine as Russia is reportedly adding more of its troops at the border with Ukraine. Diplomatic efforts remain underway. Along with big companies’ earnings, there are Purchasing Managers Index figures on Tuesday, OPEC+ output Wednesday, a slew of data on Thursday including Factory Orders, and payrolls for January on Friday.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro did not move a ton, yet, but it seems to be getting away from its weakest levels since the Summer of 2020. The good news in Italy came with a surprise non-retirement for President Sergio Mattarella, who was voted for another term by Parliament, which means Mario Draghi continues as Prime Minister as well at least into 2023.
The stability is a welcome sign for the Euro-zone, beleaguered for a while by a pandemic, whose effects remain too much for the European Central Bank to get away from an easing environment. Euro-zone inflationary growth in the form of the Consumer Price Index is out on Wednesday. ECB meets on Thursday.
GBP
Sterling is expected to have a busy week, and a strong one if indeed the Bank of England moves to hike again on Thursday. The bank is expected to increase interest rates 25 basis points to increase the benchmark to 0.5%. Anything short of expectations will cause havoc for Pound. There are no headlines related to any trouble for the Prime Minister, likely not enough support to try ousting him.
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