The U.S. Dollar has been in tight ranges this week, tightly moving as data is being digested and outlooks are being established for the year.
Overview
It is clear after this week that predicting anything long-term will be quite a challenge with the central bank policy divergence. Comments from the Fed are quite different from the European Central Bank, and the United Kingdom also is more confident in growth than the world’s second-largest economy.
GDP out of China did surprise though, so perhaps the People’s Central Bank will not be so dovish. What is definite is that equities are feeling downward pressure unlike at any point in the past year and half of economic recovery as the stimulus and easing goes away.
As January closes next week, we will get a deluge of economic indicators to truly assess the progress made in Q4. Omicron continues to be out there, but numbers have been coming down across major cities in the U.S. We shall see just how much everything has been affected and get ready for the wheels to truly get going in February.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro lost momentum this week as the European Central Bank and its main official, President Christine Lagarde, remain adamant that it is not worth considering hiking interest rates this year. By now, we are aware there is growing dissent with this line of thinking, On the geopolitical front, there is concern in Europe about building up a standoff with Russian forces after a report stating that the U.S. is allowing Baltic states to send American-made weapons to the Ukraine.
GBP
Sterling is down this morning following a negative surprise in the Retail Sales reading for December. Although traders expected a contraction of (-0.6%), the actual figure came in at (-3.7%). This is similar to how numbers in the U.S. came in disappointing after the Federal Reserve said it felt it could hike 3-4 times this year. Any hesitation to tighten as planned will certainly bode well for dollar strength or more clearly, Pound weakening.
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