The dollar is evenly mixed vs. the G10 in early trading today. Gains include +0.25% vs. NOK, +0.15% vs. AUD, +0.10% vs. EUR & DKK, and +0.07% vs. CAD. Dollar declines: -0.27% vs. JPY, -0.26% vs. SEK, -0.15% vs. GBP, and -0.01% vs. CHF. The U.S. Dollar Index is -0.03% at 103.24, just below the 100-day moving average at 103.59.
U.S. Treasury yields are lower for the second day but remain in a short-term uptrend started 28 Dec.
Daily ranges in the dollar and Treasuries will likely narrow as the week progresses and traders shift focus to next week’s FOMC 2-day policy meeting. The FOMC’s rate policy statement will be announced on Wednesday, Jan 31st, at 2pm ET. Fed Funds Futures currently imply a 50/50 chance of a quarter point cut, but consensus is traders timing of expected cuts is premature, and the broader market expects no change.
Equities Friday rally has continued into today with all major U.S equity indexes pointing to a higher open. The FOMC’s media blackout began on Saturday so markets are free to trade without concern of unexpected central bank headlines.
The Bank of Canada will announce its first rate decision of the year on Wednesday. Expectation is for no change (10% probability of a quarter-point cut) to the current 5% target rate. Overnight Index Swaps are pricing in nearly a total 1% of cuts by the BoC’s final rate policy meeting in December.
This week’s economic calendar includes Mortgage Applications on Wednesday, Annualized GDP, Durable Goods Orders, Weekly Jobless Claims and New Home Sales on Thursday.
