The U.S. Dollar is up against most of its counterparts with Japanese Yen being the notable exception.
Overview
Bloomberg explained the dire state of markets by pointing out the S&P entered its fastest correction in history, taking just six days to lose 12%. European stocks are down nearly 4.0% and U.S. futures point to another 1.5% fall on the open.
Market participants are now fulling pricing in a rate cut from the Federal Reserve in March, up from just 50% yesterday morning. An extraordinary move.
There is a slew of fundamental data set for release today in the U.S. but may take a backseat to the overall risk environment. Personal Income in January beat expectations and the 0.6% reading beat December’s reading of 0.2%. Personal spending, however, failed to meet expectations with only a 0.2% gain last month. A separate report showed that the Fed’s favorite inflation reading showed that price pressures remain subdued with the year-over-year inflation rate at 1.7%.
The Federal Reserve’s James Bullard has begun speaking at the time of writing.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
JPY
After a brief bout of decoupling earlier in the month, the safe-haven Japanese Yen is rallying for a second day as the bloodbath in global markets deepened overnight. The Yen is up 2.6% over the past five days against the U.S. dollar, which represents its best weekly gain since 2016.
CAD
Commodity-based currencies continue to sell-off with the Canadian dollar touching a fresh 8-month low. The New Zealand dollar fell to a four-month low and is set for a 3.5% drop in February. It is now very possible that both of the central banks in Canada and New Zealand will need to join the chorus of monetary easing ahead of what may be a tough economic year with downward pressures.
Bloomberg’s commodity index is on pace to post its biggest drop since 2011. It is important to recognize that pressures may add up long-term on petro-currencies as the International Energy Agency had already predicted turmoil in demand for fossil fuels with the rise of electric-powered vehicles and the green economy. A revamp in environmentally friendly infrastructure could help undo some of the damage that CAD, NOK, MXN, and others may face from a decline in overall demand and production in the second half of the year.
