Yahoo Finance Monetary Policy Outlook Going Against the USD, with the EUR on the Move
Earlier in the Day:
There were no material stats released through the Asian session this morning, though the lack of data didn’t hold the markets back from making moves through the session.
At the time of writing, the Aussie Dollar was up 0.47% to $0.7954, with the Kiwi Dollar up 0.48% to $0.7277. The Yen was also on the move, rallying 0.38% to ¥110.64 against the Dollar. For the Yen, the gains are policy driven, with the markets now beginning to consider a near-term move by the BoJ.
The Yen’s rally came in spite of the equity markets making strong gains through the early part of the day. Market sentiment towards the global economy remains robust at the start of the year and, following the U.S equity gains to new record highs on Friday, there was nothing to get in the way of a Monday rally.
The Nikkei was up 0.34% at the time of writing, with the gains coming in spite of a stronger Yen, while the Hang Seng and CSI continued their remarkable runs, up 0.78% and 0.62% at the time of writing.
For the ASX200 it was a little choppier, the index giving up stronger gains from early in the session to sit up 0.12% at the time of writing.
The Day Ahead:
Economic data out of the Eurozone this morning is on the lighter side, limited to the Eurozone’s November trade balance.
Following last week’s 1.44% rally, the EUR gave up $1.22 levels early in the Asian session this morning before rebounding strongly ahead of the Eurozone’s trade figures due out later this morning. Following Germany’s trade data, the Eurozone’s trade surplus is forecasted to widen from €18.9bn to €22.4bn in November, supporting the market’s sentiment towards the Eurozone economy and global demand for European goods.
Outside of the stats, news has been hitting the wires in the early part of the day of possible resistance to the terms of the grand coalition, with certain demands from the SPD reportedly missing from the current version of the agreement.
Any negative news could weigh on the EUR, though the markets will likely wait until more concrete details emerge.
At the time of writing, the EUR was up 0.22% to $1.2224, with politics and trade data the key drivers through the session.
For the Pound, there are no material stats scheduled for release, which leave Sterling exposed to Brexit chatter at the start of the week.
Friday’s 1.4% rally came off the back of hopes that Britain will see a soft Brexit and maintain close relationships with the EU, whilst a softer Dollar will have certainly contributed to the Pound’s gain.
While Dollar woes are unlikely to disappear anytime soon, any Brexit chatter through the day will be of influence, particularly if the chatter is in contradiction to last week’s soft Brexit noise. The Pound could fall back to low $1.36 levels, with a Dollar rebound also a possibility when considering how far the Dollar has fallen at the start of the year.
The Pound was up 0.13% to $1.3746 at the time of writing, with Brexit in focus.
Across the Pond, with the U.S markets closed for Martin Luther King Day, there are no stats to consider, with trading volumes expected to be on the lighter side this afternoon.
Following last week’s inflation figures, which were not as bad as the moves in the Dollar had suggested, upside through the day is likely to be limited, though the Dollar bashing will have to come to an end soon, with the markets likely to begin considering the Dollar as oversold.
At the time of writing, the Dollar Spot Index was down 0.04% to 90.935, recovering from an intraday low 90.825, with very little to provide the Dollar with direction through the day.
This article was originally posted on FX Empire
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