US Dollar Falls Ahead of Fed Speeches
The US dollar fell against its major trading partners early Tuesday, except for an increase versus the yen, before a busy day of economic data releases and appearances by Federal Reserve officials.
This week’s US inflation data could potentially reinforce the dollar’s strong momentum and cast further doubts on whether the Fed needs to cut at all, ING analyst Francesco Pesole said in a note.
Earlier Tuesday, the National Federation of Independent Business said small business optimism surged in December to its highest point since October 2018, lifted by a much-improved economic outlook due to the change in the administration, according to NFIB.
Kansas City Fed President Jeffrey Schmid is due to speak, followed by New York Fed President John Williams.
Analyst said the former is a hawk and the latter generally hawkish-leaning, meaning they could place more emphasis on the tight jobs market compared to the dove Goolsbee – who stressed on Friday that the December jobs report was not a sign of overheating.
The dollar index (DXY) can find its way back above 110.0 after a modest, likely positioning-driven correction yesterday evening.
A quick summary of foreign exchange activity heading into Tuesday showed USDEUR rose to 1.0255 from 1.0217 at the Monday US close and 1.0196 at the same time Monday morning.
There are no Eurozone data on Tuesday’s schedule. European Central Bank chief economist Philip Lane said overnight that the ECB needs to be careful not to cut its policy rate too slowly or too quickly. The next European Central Bank meeting is scheduled for Jan. 30.
GBPUSD rose to 1.2178 from 1.2176 at the Monday US close and 1.2112 at the same time Monday morning. There are no UK data on Tuesday’s schedule. The next Bank of England meeting is scheduled for Feb. 6.
USDJPY rose to 158.0780 from 157.6499 at the Monday US close and 157.3257 at the same time Monday morning.
The Japanese current account surplus widened in November while Japanese business sentiment improved modestly in the same month, according to data released overnight. The next Bank of Japan meeting is scheduled for Jan. 23-24.
USDCAD fell to 1.4389 from 1.4399 at the Monday US close and 1.4430 at the same time Monday morning. There are no Canadian data on Tuesday’s schedule. The next Bank of Canada meeting is scheduled for Jan. 29. #US Dollar Falls Ahead of Fed Speeches CBN Opens FX Window for BDC to Stock up at NFEM Rate
