Daily Market Update

Sterling And Kiwi Gain; Dollar Falls For First Time In A Week

January 23, 2019

The U.S. Dollar is slightly down against the majority of its counterparts this morning, with the biggest losses coming against the British pound and New Zealand dollar. The Bloomberg Dollar Spot Index is lower for the first time in seven days.

Overview

The U.S. government has remained partially closed for nearly a month. Senate Majority Leader Mitch McConnell announced votes on two competing bills that would reopen the government but neither is likely to pass. With the government shutdown, traders and the Federal Reserve alike are missing key pieces of economic data that are making it harder to analyze America’s real economy. An extended delay in economic releases could cause havoc on the outlook for future interest rate policy and cause unexpected volatility once the government finally reopens.

While economic data remains light in the U.S., market participants will focus on Day 2 of the economic summit in Davos, Switzerland. Although due to domestic issues, many of the world’s leaders are not in attendance.

 

What to Watch Today…

  • Day 2 at Davos, Switzerland

The complete economic calendar can be found here.

 

NZD

The New Zealand dollar jumped nearly one percent against the U.S. dollar after inflation data beat estimates. Consumer prices rose 1.9% in the fourth quarter on a yearly basis, higher than the 1.8% forecast by economists. The uptick in inflation decreases the chances that the Reserve Bank of New

GBP

The British pound rose yesterday and then experienced a sharp jump in the early hours of this morning. The sterling is up nearly 1.5% over the past two days and it’s currently at its strongest level since mid-November. GBP/USD remains at the mercy of Brexit related headlines so expect sharp moves to remain the norm. Those headlines proved sterling-positive today. Pro-Brexit Trade Secretary Liam Fox hinted that he could live with a short extension in order to get a deal done, decreasing the chances of a “no-deal Brexit.” In addition, it appears the opposition Labour party will support a plan to delay Brexit and avoid no-deal, boosting the sterling.

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