The U.S. Dollar is trading in very tight and not exciting ranges as the action across other markets continues to begin the year.
Overview
Today will be a day of questions for Jerome Powell as the Senate Banking Committee gathers to vote on his confirmation for another Fed term. In comments yesterday, the Fed chairman indicated that officials are indeed trying to combat inflation, but also warned that the economic and market growth of 2022 may come at a much slower pace than last year. Thus far, equities seem to be the ones taking the brunt of the news while the buck remains subdued.Inflationary figures tomorrow should continue the conversation about how much and how soon to tighten as well as how many times the Fed can increase interest rates this year. Pfizer made an announcement regarding the development of a hybrid vaccine that should combat Omicron more effectively.
Globally, there is currently a divergence in the perception of the effects of Omicron with some nations like China and Japan thinking stimulus and caution, while the U.S., U.K., and others focus on how to ease the burden on people’s activity while moving on from the pandemic mentally.
What to Watch Today…
- No major economic events are scheduled for today
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CAD
The “Loonie” is down as equity markets suffer based on the idea that the era of easy money is now going to be over. CAD is back trading at the exact level as the year started following major downswings as Omicron effects are measured. We see room for growth for the Canadian Dollar especially if the Bank of Canada remains in tightening mode and follows the Fed.
GBP
Sterling has nothing grand in store for us today, but U.K. headlines do as Prime Minister Boris Johnson finds himself in yet another scandal regarding activities that are against COVID protocol. Another party, another round of newspaper front pages questioning the PM’s ability to be trusted.
There is the opposition going as far as demanding he resign, while others are wondering if indeed this will be a time to challenge Conservative party dominance and leadership. Anything that seems to lead towards further instability in the U.K. could significantly hurt Pound going forward.
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