US Dollar Rises Ahead Macro data, Inauguration
The US dollar rose against its major trading partners early Friday, except for a small decline versus the euro, ahead of another busy data release day before the long US holiday weekend.
FX markets may enter holding mode today as the US data flow slows and some wait-and-see approach prevails ahead of Monday’s presidential inauguration, said ING Francesco Pesole.
Analyst said the perception at the end of a busy week in macro news is that the optimism around a month-on-month slowdown in core inflation is cautious at best.
‘The inherently forward-looking markets are factoring in Trump’s inflationary policies from a starting point that is already significantly above the target. So, despite stretched positioning and short-term overvaluation, the dollar continues to dodge true catalysts for a correction’.
Today’s calendar includes housing starts and industrial production in the US, which are both expected on the strong side. The Federal Reserve enters the communication blackout period tomorrow ahead of the 29 January meeting.
A quick summary of foreign exchange activity heading into Friday showed that USDEUR rose to 1.0305 from 1.0300 at the Thursday US close and 1.0289 at the same time Thursday morning.
Eurozone consumer prices rose as expected in December, lifting the year-over-year rate for the overall consumer price index and keeping the core year-over-year rate in line with the previous month, according to data released earlier Friday. The next European Central Bank meeting is scheduled for Jan. 30.
GBPUSD fell to 1.2210 from 1.2231 at the Thursday US close but was above a level of 1.2205 at the same time Thursday morning. UK retail sales declined unexpectedly in December, but sales were still up sharply from a year earlier.
Bank of England Governor Andrew Bailey and Deputy Governor Sam Woods are due to speak today. The next Bank of England meeting is scheduled for Feb. 6.
USDJPY rose to 155.6938 from 155.2136 at the Thursday US close but was below a level of 155.8078 at the same time Thursday morning. There were no Japanese data released overnight. The next Bank of Japan meeting is scheduled for Jan. 23-24.
USDCAD rose to 1.4414 from 1.4398 at the Thursday US close and 1.4376 at the same time Thursday morning. Canadian foreign securities purchase data for November are due to be released. The next Bank of Canada meeting is scheduled for Jan. 29.
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