Dollar Dives After Trump’s Speech
Today’s another busy day for global economy watchers who are still digesting President-elect Donald Trump’s response to newly released reports regarding his connections with Russia. Today the Eurozone’s industrial production data for November stands front and centre for data releases. Also, the European Central Bank’s (ECB) December meeting minutes is also due later today and will make an interesting read.
The US economic calendar is jam packed with economic data points as the nation’s import and export price index, weekly jobless claims and the monthly budget statement are waiting to cross the wires later in the day. Moreover, planned appearances by a slew of Federal Reserve (Fed) officials is expected to keep market participants in active mode today. Away from all this hustle and bustle, the British economic calendar wears a deserted look today, probably taking a breather after witnessing a deluge of economic data yesterday.
Pound Sterling – UK Markets
The British Pound strengthened against the US Dollar yesterday, reversing an earlier loss as Sterling fell to an all-time low against the greenback reaching the crucial 1.20 mark. The drop in currency occurred amid after newly elected US President Donald Trump gave his first news conference following victory in November’s Presidential election.
Separately, the Bank of England Governor, Mark Carney surprised investors as he sounded optimistic over the central bank’s outlook for the UK economy. He stated that the central bank no longer considered “Brexit” as the largest domestic risk to the nation’s financial stability, while stating that it needed to upgrade its economic forecasts as risks arising out of the Brexit vote had died down. He also stressed on the need for a transitional deal for exiting the European Union. Meanwhile, at the beginning of this week, UK’s Prime Minister, Theresa May’s comments have hinted towards the possibility for a “Hard Brexit”. On the data front, the NIESR GDP estimate showed that the British economy grew 0.5% in the three months to December.
US Dollar – US Markets
The US Dollar has extended its previous session losses against Sterling and the Euro this morning. Going ahead, market participants look forward to the US weekly jobless claims data which is anticipated to have registered a rise last week. This downbeat data could put pressure on the greenback to remain in the red against its major peers in the session ahead. In addition to this, export and import price indices for December will be eyed by investors, with both the indicators being expected to rebound. In addition, a host of Fed officials are expected to deliver speeches today.
Yesterday, US President-elect, Donald Trump’s hour-long press briefing failed to break new ground. Market participants were left disappointed by the lack of details related to Trump’s future fiscal spending plans and this caused the US Dollar to end lower against its peers. On the data front, US mortgage applications advanced to a 6-month high last week, as mortgage rates slightly dipped after nearly two months of steady increase.
Euro – European Markets
This morning, the shared currency is trading on a stronger footing against the US Dollar. Data from Germany, the Eurozone’s largest economy, showed that annual GDP growth advanced more than market expectations to a 5-year high level in 2016. Plus, Italy’s seasonally adjusted industrial output surpassed estimates in November, indicating a possible acceleration in economic activity. In other economic news, French consumer price index advanced in line with market estimates for December.
Later in the day, the ECB is slated to publish minutes of its December meeting. Investors will be paying close attention for further details on what the central bank’s officials expected from the Eurozone’s economy while reducing the size of its monthly asset purchases. Additionally, the Euro region’s industrial output data is due in a short while and is expected to rebound in November. Tomorrow, market participants will keep tabs on German wholesale price index for December.
Other Currencies – Highlights
The Japanese Yen is trading higher against the US Dollar this morning, after the greenback came under pressure after newly elected President, Donald Trump’s first press conference failed to unravel his future fiscal policy plans. Earlier in the session, the Cabinet Office released its Eco watchers survey which indicated that Japan’s economic outlook index declined, while the current situation index remained steady in December. Separately, overnight releases showed that Japan posted a current account surplus for the 29th straight month in November and ended up registering its largest surplus for the month. Meanwhile, the nation’s trade surplus narrowed less than expected in the same month.
During the previous session, preliminary data indicated that Japan’s leading economic index advanced to a 15-month high level in November. And the flash print for coincident index strengthened more than expected in November, its highest since March 2014. Earlier in the week, the Cabinet Office revealed that Japan’s consumer confidence index strengthened to a 3-year high level in December.