Dollar Mixed, Equities Higher on Trade Optimism

  • Risk on sentiment has returned due to press reports that suggest that the US may lift its tariffs on China
  • During the North American session, the US reports December IP and Canada reports December CPI
  • There has been no new Brexit news to speak of, and yet sterling is powering to two-month highs; UK reported weak December retail sales
  • Japan reported December national CPI
  • Colombia reports November retail sales and IP

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Dollar Still Firm After UK No Confidence Vote

  • As expected, UK Prime Minister May survived the no confidence vote yesterday 325-306
  • Press reports suggest that the EU will consider an extension of the Article 50 deadline well into H2
  • Federal prosecutors in Seattle will pursue a criminal case against China’s Huawei
  • The economic costs of the shutdown are mounting
  • During the North American session, the US reports January Philly Fed index and weekly jobless claims
  • Bank Indonesia kept rates steady at 6.0%, as expected; SARB is widely expected to keep rates steady at 6.75%

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Dollar Still Firm, Markets Still Calm Ahead of UK No Confidence Vote

  • Markets are relatively calm after UK Parliament overwhelmingly rejected Prime Minister May’s Brexit plan by a vote of 432-202
  • Opposition Labour has called for a vote of no confidence in the government today
  • There are no signs of compromise from either side with regards to the US shutdown
  • December US retail sales and business inventories reports were due out but have now been postponed
  • The Fed will still release its Beige Book today
  • Central Bank of Turkey kept rates steady, as expected; South Africa reported November retail sales

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Dollar Firm, Markets Calm Ahead of Brexit Vote

  • UK Parliament is scheduled to hold its Brexit vote today
  • Market moves during the initial post-vote period will be most difficult to gauge
  • US reports December PPI
  • Germany posted growth of 1.5% in 2018, the weakest in five years
  • Japan reported weak December machine tool orders
  • China reported December money and loan data; Israel reports December CPI

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Drivers for the Week Ahead

  • Congress did not meet over the weekend and so the partial shutdown continues
  • Investors are starting to mark down US growth forecasts for Q4 and Q1
  • US reports December PPI Tuesday and then retail sales Wednesday
  • This is another week with a heavy speaking schedule for Fed officials
  • Weak China December trade data is adding to risk-off sentiment
  • UK Parliament is schedule to hold its Brexit vote Tuesday
  • UK, Japan, and Canada report CPI data this week
  • Central banks of Turkey, South Africa, and Indonesia meet

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FX Quarterly Outlook for First Quarter 2019

In the latest FX Quarterly, our strategists provide their views on major events across developed and emerging markets in Q1 2019.

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Dollar Limps into the Weekend

  • President Trump appears to be moving closer to invoking an emergency and tapping unused disaster relief funds to build his wall
  • Yet such drastic solutions would not bode well for the upcoming debt limit debate
  • Press reports suggest that the Article 50 Brexit date will be extended beyond March 29; it was quickly denied
  • During the North American session, the US reports December CPI
  • UK reported November trade, GDP, and IP; Italy reported weak November IP
  • Australia reported November retail sales
  • Brazil reported December IPCA consumer inflation

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Dollar Narrowly Mixed as Shutdown Drags On

  • The dovish choir at the Fed is getting quite loud; the FOMC minutes delivered a rare surprise
  • Fitch warned of a possible cut to the AAA rating for the US
  • Reports suggest President Trump walked out of a meeting with Democratic congressional leaders yesterday
  • UK Prime Minister May is weakened ahead of the next week’s Brexit vote
  • The US-China trade talks ended with a positive tone, but China is not giving US anything that it hasn’t promised before
  • China reported softer than expected inflation readings for December
  • Peru central bank is expected to keep rates steady at 2.75%

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