USD
The U.S. Dollar is trading in mixed direction against its major counterparts as political turmoil threatens established trade agreements. After gaining on good data last week, the “buck” sustained most of its gains as the prospect of fiscal spending and monetary policy normalization in the U.S. is more realistic than in any other region.
Labor improvements continue, inflation is on the rise, and even the always maligned manufacturing sector is exceeding expectations. The Fed is more likely to hike again during the second quarter of the year as the central bank weighs the beginning of a new administration.
There is no significant data scheduled for today, but we’ll hear from Atlanta Fed President Dennis Lockhart at around 1PM. His commentary may provide some guidance on the rate outlook, which could further support the greenback.
JPY
The Yen had originally fallen in value overnight, but rose quickly as domestic stock indexes dropped and finished in the red. Global leaders are a bit jittery about the Brexit and moving once again towards safer assets. Currencies have become the preferred way for investors to show their displeasure with anemic growth and political havoc.
Safe-haven Yen will be an instrument for hedging as uncertainty weighs on Western powers with growing struggles and new parties in hold of power. JPY has been steady thus far in the start of the year.
GBP
Pound Sterling declined big league following Prime Minister Theresa May’s statements on her full support of Brexit that prioritizes immigration and the rule of law, not access to a single market. After being scrutinized recently for her struggles to find cohesiveness in her approach to separating from the EU, PM May lashed back at critics saying that she is not interested in trying to accommodate those interested in market participation. According to May, exiting is about “getting the right relationship, not about keeping bits of membership.” Pound is trading at a 10-week low.
