The U.S. Dollar is trading in weaker ranges across the board to end a week, that up until now, had witnessed a 1.4% rise throughout in value.
Overview
The rallies in various exchanges halted as even Bitcoin and Two-year treasury yields slowed their momentum regardless of indication that the Federal Reserve will not be looking to be exercising a lot of loose monetary policy in the next few meetings. Fed Chairman Jerome Powell made comments at an event in Dallas that members are in no hurry to jump into further cuts especially after presented with solid growth figures and inflationary pressures for consumers and producers this week.
At the time of writing, the release of October Retail Sales showed an advance of 0.4% vs. 0.3% expected while the prior month’s numbers were revised upwardly. In fact, revealing double the original readings. November Empire Manufacturing survey was more optimistic than anticipated, signaling optimism in one of the nation’s busiest regions.
With data like this and statements like Powell’s, markets are cementing acceptance that borrowing costs will not be lowered as officials can afford to take their time and use a wait-and-see approach. Odds of a cut by the Fed at their next meeting stand at just 60.0%. Although it may look like a Friday for Dollar decline, this will mark the seventh straight week of USD gains. It remains near a two-year best.
What to Watch This Week…
- Monex USA Online is always open
MXN ⇓
The Mexican Peso is struggling to get away from August ’22 lows following another 25-basis-points cut by Banxico and a notice from Moody’s credit rating. The central bank highlighted that inflation had started to ease which made it possible for officials to agree on a third consecutive cut to interest rates. Meanwhile, Moody’s perspective on Mexico went from “stable” to “negative” although it is noted that there is not a lowered rating since the economic fundamentals are holding up. There is worry that Mexico could be most negatively impacted by the introduction of higher tariffs, which will keep boding poorly for Mexican Peso recovery prospects.
EUR ⇑
The Euro stopped dwindling and is attempting to recover some ground after falling to its lowest value since October 2023. The news for the Ancient Continent have not been great with stock exchanges not enjoying the climb seen here as anxiety grows over potential for tariffs and other diplomatic friction affecting trade. Germany’s economy and the euro-zone’s overall avoided recessionary pressures, but the slow improvement seen thus far in the second half of 2024 may fade quickly if negotiations with China and the U.S. come to head. Plenty of data from prices to Purchasing Managers Indices are there next week to see if there may be some silver linings.
