US Dollar had a mixed start to the week.
The US Dollar Index recovered slightly on Friday, but not sufficiently to change attitude. With comments from Chicago Fed member Austan Goolsbee, the US Dollar (USD) is starting to act like a loose canon. Goolsbee expressed amazement at the risk-on market reaction, claiming that the market is completely wrong. Meanwhile, markets are challenging the Fed, with some hedge firms. And banks asking for a goldilocks scenario while the Fed tries to control rates and inflation.
In terms of the economy, The calendar is light at the start of the week. Still, several significant releases are on the horizon as the year draws to a close and markets prepare for the Christmas quiet. The final estimate of the US Gross Domestic Product (GDP) for the third quarter, due on Thursday. Might influence markets ahead of Friday. The Personal Consumption Expenditure (PCE) Price Index. The Fed’s favored inflation gauge, will be issued on the final day before Christmas. Along with the November Durable Goods data.
Daily Market Movers: The Fed is attempting to understand markets.
This Monday, Chicago Fed member Austan Goolsbee shakes the tree with the following remarks: He believes that both Powell and Williams are correct: the economy can thrive while inflation falls. Despite the fact that markets are going well ahead of When examining the market reaction to the Fed’s rate decision last week, they speak for themselves.
Already, two ECB members issued statements on Friday and Monday, reiterating ECB Chairman Christine Lagarde’s stance that rate cuts are not on the table. The Euro is unaffected by the independent opinions and repetition.
Houthi rebels assaulted a tanker in the Red Sea once more, causing maritime companies to avoid the area and reroute ships via lengthier routes.
According to an article published in the Financial Times, several industrialized countries. Including Europe and the United States, are experiencing higher-than-normal levels of business bankruptcies. In other nations, such as France and Japan. The ratio has risen by more than 30% from its regular yearly level. average. Rates in certain Nordic nations, like as Sweden and Finland, have risen to levels not seen since the global financial crisis of 2008-2009.
The preliminary Purchasing Managers Index (PMI) statistics for December were the main takeaway from last Friday: for the services sector. European PMIs slid further into contraction, while US and UK PMIs rose. With the ECB refusing to commit to any cutbacks in 2024, European business activity may worsen even further. Meanwhile, a soft landing in the United States is possible, with the Fed using all available measures to sustain the economy and keep inflation under control.
The National Association of Home Builders released its December report at 15:00 GMT. Previous was 34, with 37 only a tad higher expectations 36. At 16:30 GMT, the US Treasury Department will go to markets to place a short-term 3-month and 6-month bill.
This week has been a dismal start for markets, with Asia leading the drop. In Europe, the key indices are giving back some of last week’s gains, with the German Dax down 0.50%. Futures in the United States are unchanged.
According to the CME Group’s FedWatch Tool, markets are pricing in an 89.7% possibility. That the Federal Reserve will hold interest rates steady at its January 31 meeting. Around 10.3% expect the first cut to occur soon.
The benchmark 10-year US Treasury Note is trading near 3.95%. And is down a few basis points this week.
