(CercleFinance.com) -The Dollar finally seems to be stemming its slide: the Dollar-Index is up +0.5% at 103.70 after a brief foray below 103 on Friday.
But the “fact of the day” is the weakness of the Euro, which is down -0.6% at 1.0815 against the $ (and -0.2% against the Swiss Franc at 0.9445).
The pound was the weakest at -0.7% against the $ and -0.1% against the euro… a paradoxical decline, since the yield on the pound rose sharply by +10pts to 4.242%.
The euro’s weakness, which has risen in 3 sessions from 1.100 to almost 1.0800, seems to reflect expectations of a rate cut in Europe before the FED ‘pivots’… because France and Germany are already in recession, and their growth figures are the antithesis of those in the US (recession in the Eurozone versus +5.2% GDP in Q3 2023).
Forex traders seem to have a rather peculiar interpretation of Jerome Powell’s comments on Friday, when he said that it was “premature to talk about a rate cut” and assured them that “a rate hike remains on the table”, but the markets seem to have decoded another message which said “we will cut rates sooner than expected” (the consensus is now for mid-March).
The highlight of the week will be Friday’s NFP (employment figures), preceded on Tuesday by the ISM services index and on Wednesday by the ADP survey of private-sector job creation, before the Michigan consumer confidence index on Friday.
Other indicators on the week’s menu include European services PMIs, eurozone Q3 retail sales and GDP, and final German inflation figures.
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