The U.S. Dollar is trading in familiar ranges following an eventful first week of the year.
Overview
A mix of data pointing at an economy that is still growing added to concerns across risk markets that they may be assuming too much when it comes to the Fed’s willingness to pivot. Thus far, it has been hard to find reason to worry about the American picture, but a contraction in the Services sector hiring for December revived enthusiasm that indicators will start crumbling enough for the Fed to turn dovish.
Leaving interest rates for longer does not appetize those in equities. However, they may get their incentives elsewhere as surprises are already arriving. Over the weekend, Saudi Arabia decided to cut its official sell price for oil barrels across the globe which in turn brought overall market prices down by 3.0%, particularly affecting Brent Crude.
With more participants returning to work, we expect more liquidity and perhaps busier markets. There is plenty in the calendar for this week as Fed members share commentary all throughout, while Consumer Price Index data is set to be released on Thursday and Producer Price Index figures out on Friday. Major banks will also be presenting their fourth-quarter results.
What to Watch Today…
EUR ⇓
The Euro is quiet after significantly dropping last week as speculation is dying down that the Fed will be jumping toward cuts to interest rates in the first half of the year. As the year gets going, the European Central Bank’s commitment will be put to the test since the economic performance across Euro-zone nations has left much to be desired. We will get a glance at Unemployment in the region tomorrow and will look ahead to the World Economic Forum’s global risks report out on Wednesday for clues on what the chances are for more robust growth after the effects of higher borrowing costs.
GBP ⇑
Sterling came down slightly as London reignited its engines. This year, the Bank of England is expected to maintain its interest rates high, and officials warn that inflation threats have not been eliminated. Gauges on wages showed that in three months, those employed continued to see increases in a tight labor market. As the week goes on, we will watch out for any statements on BOE line of thinking and assess if Industrial Production has any sway on the currency when released Friday.
