US Dollar Rises Ahead of Powell’s Appearance
The United States (US) dollar improved modestly against its major trading partners early Tuesday as markets prepare for an appearance by Federal Reserve Chairman Jerome Powell.
After the release of the minutes of the Federal Open Market Committee’s Dec. 13-14 meeting, which indicated no preference for a rate decrease in 2023, and a slower-than-expected increase in hourly earnings in December, markets will be anxious to glean any clues from Powell on the future path of policy.
Also Tuesday, weekly Redbook retail sales data will be released today followed by the Investors Business Daily’s monthly confidence survey for January. Wholesale inventory and sales data for November will also be released today.
Earlier Tuesday, the National Federation of Independent Business’ monthly small business sentiment reading declined further in December as small businesses are still facing high inflation that is tightening profits.
The outlook for business conditions this year deteriorated further. A quick summary of foreign exchange activity heading into Tuesday shows that EUR-USD fell slightly to 1.0728 from 1.0733 at the Monday US close but remained well above the 1.0686 level at the same time Monday morning.
There are no EU-level data on Tuesday’s schedule. ECB member Isabel Schnabel said earlier Tuesday that rates will need to rise significantly to assure that inflation will return to the ECB’s 2% target, Bloomberg reported. The next European Central Bank meeting is scheduled for Feb. 2.
GBP-USD fell to 1.2142 from 1.2185 at the Monday US close and was virtually unchanged from the 1.2143 level at the same time Monday morning. There are no UK data or speeches on Tuesday’s schedule. The next Bank of England meeting is scheduled for Feb. 2.
USD-JPY rose to 132.1814 from 131.8835 at the Monday US close but was below the 132.3457 level at the same time Monday morning.
Tokyo CPI, an early indicator of overall Japanese consumer inflation, rebounded in December and pushed up the year-over-year rates for both total and core prices, data released overnight showed.
Household spending declined in November. The next Bank of Japan meeting is scheduled for Jan. 25. USD-CAD rose to 1.3411 from 1.3391 at the Monday US close and 1.3377 at the same time Monday morning. There are no Canadian data on Tuesday’s schedule. The Bank of Canada meets next on Jan. 25. #US Dollar Rises Ahead of Powell’s Appearance
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