The U.S. Dollar is trading in much stronger ranges mid-week than how it started as market anxieties grow over potential for tariffs and higher inflation to come globally
Overview
Stocks also fell after some pessimism got hold of the market with Fed members seeming hesitant on foreseeing multiple interest rate cuts. The U.S. economy is holding up better than most other advanced nations, so the idea of a less stimulus-driven Fed worries global investors. Overall, the Bloomberg Dollar Spot Index is heading towards its best level in two years.
Earlier, the ADP Employment Change for December showed a lower number of added payrolls than expected at 122K instead of 140K. Later at 2PM, there could be a significant reaction based on the release of Fed Minutes. Tomorrow will be a day of mourning for former President Jimmy Carter, but banking functions will remain live and active for FX market needs.
What to Watch This Week…
- US Nonfarm Payrolls, Friday 8:30AM
- Monex USA Online is always open
GBP ⇓
The Pound collapsed overnight by over 1.0%, taking it down to its lowest value against the Buck since November 2023. Equity markets in the U.K. had a terrible session as investors worry about the incessant state of “stagflation,” higher prices for everything accompanied by anemic economic growth. Per the latest data, U.K. Gross Domestic Product contracted in both September as well as October. Because of the risk, treasury bond yields are going up as 10-year notes are at the highest since 2008 and the 30-year note at a peak not seen since 1998.
MXN ⇓
The Mexican Peso is down by over half a percent this morning as are other tender, particularly Emerging-Markets, because of confusion over the potential for tariffs. In the past couple of days, the narrative has changed from optimism over focus on just critical imports to now the potential for the use of emergency powers to tax a wider range of items. At the moment, markets are headed downward while Buck keeps rallying.
