Dollar Tries to Claw Back Losses

USD

After falling for the past six weeks, the U.S. Dollar Index is up this morning as the greenback has gained against all of its major counterparts except for the Japanese yen. Overall, the DXY had its worst week since July last week and even strong Non-Farm payrolls were unable to change the dollar’s fortunes. The economy added 227K jobs, but weaker-than-expected wage growth kept the dollar from rising.

With a light docket of economic data slated for this week, the greenback will be short on opportunities to claw back recent losses. There is no significant data on today’s schedule and only Trade balance and JOLTs job openings for tomorrow. A data free Wednesday leads into a light Thursday with only weekly jobless claims and wholesale trade data expected to be released. The University of Michigan consumer sentiment will round out the light week on Friday. With a lack of fundamentals, traders may look to commentary from numerous Fed officials. Bullard will speak in St. Louis on Thursday morning, followed by Evans later in the afternoon.

We will continue to keep an eye on dollar-related developments with the new administration.

 

EUR 

The Euro has fallen over half a percent this morning against the U.S. dollar, despite the release of strong data in the Eurozone’s biggest economy. Germany factory orders surged 5.2% in December, the largest once month gain since 2014. Eurozone PMIs, however, were mostly weaker than expected, putting mild downward pressure on the common currency.

Political developments are being blamed for the Euro’s weakness this morning. Far-right French presidential candidate Marine Le Pen unveiled her presidential election platform over the weekend. Le Pen hopes to leave the Euro and return to a national currency. She has also proposed numerous “smart protectionist” policies which would include banning foreign investors from “important” French industries and to ban imports of all type of goods that don’t respect French norms (sounds racist, right?). Odds makers only have Le Pen with a 20.0% chance of winning but more unlikely results have become the norm.

 

GBP 

The British pound is trading softer this morning, coming off a strong week last week. There was no major data released this morning so expect GBP/USD to hold prevailing ranges. British Retails sales will cross the wires tomorrow and then manufacturing and industrial output are set for Friday and could prove crucial to the sterling.

We will continue watch as Theresa May comes closer to activating Article 50 to officially begin the U.K.’s exit from the EU.