The greenback opened the week with a strong footing, as despite missing market's expectations, Nonfarm Payrolls released last Friday weren't enough to take US policymakers away from the tightening path. Furthermore, Fe's officers speaking in different events, backed the case for three rate hikes this year, boosting the American currency further. All hell broke loose on Wednesday when a news agency released a headline indicating that Chinese officers were recommending halting or reducing buying of US Treasury yields. For the dollar, it was all the way down from there, despite China's government denied the [URL deleted] news the next day.
The [URL deleted] EUR/USD pair recovered the 1.2000 threshold, and extended its gains on Thursday, as US PPI came below expected, with producer prices falling for the first time in over a year, resulting at -0.1% in December, amid declining costs for services. The Minutes of the latest ECB meeting, added fuel to the fire, reminding speculative interest how optimistic policymakers are on economic growth.
Early Friday, headlines indicating that German parties have achieved a breakthrough in talks aimed at forming a government, sent the pair past 1.2100 for the first time since January 2015, while tepid US inflation and sales data, kept the pair at multi-year highs. Despite US core inflation posted its biggest gain in almost a year, it remained well below Fed's 2% target, up 0.3% in the month and1.8% from a year earlier. Retail Sales in December, posted an expected modest advance of 0.4%.
So what happens now? Well, firstly, the week is set to start in slow motion with the US on holidays, and no relevant data coming from the country until Thursday, when housing figures and a Fed manufacturing survey will be out. In Europe, however, the macroeconomic calendar will be more busy, with data releases spread all through the week, and including EU inflation.
Secondly, even the most distracted knows that Draghi & Co. would prefer to see the pair below 1.2000, as a stronger currency means lesser inflationary pressures, so jawboning should not impress investors.
The [URL deleted] EUR/USD pair recovered the 1.2000 threshold, and extended its gains on Thursday, as US PPI came below expected, with producer prices falling for the first time in over a year, resulting at -0.1% in December, amid declining costs for services. The Minutes of the latest ECB meeting, added fuel to the fire, reminding speculative interest how optimistic policymakers are on economic growth.
Early Friday, headlines indicating that German parties have achieved a breakthrough in talks aimed at forming a government, sent the pair past 1.2100 for the first time since January 2015, while tepid US inflation and sales data, kept the pair at multi-year highs. Despite US core inflation posted its biggest gain in almost a year, it remained well below Fed's 2% target, up 0.3% in the month and1.8% from a year earlier. Retail Sales in December, posted an expected modest advance of 0.4%.
So what happens now? Well, firstly, the week is set to start in slow motion with the US on holidays, and no relevant data coming from the country until Thursday, when housing figures and a Fed manufacturing survey will be out. In Europe, however, the macroeconomic calendar will be more busy, with data releases spread all through the week, and including EU inflation.
Secondly, even the most distracted knows that Draghi & Co. would prefer to see the pair below 1.2000, as a stronger currency means lesser inflationary pressures, so jawboning should not impress investors.
Last edited by a moderator:
