The U.S. dollar was mostly unchanged over the weekend.

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The U.S. dollar was mostly unchanged over the weekend.

The U.S. dollar was mostly unchanged over the weekend.

Overview

The greenback did find support during Friday’s session following a strong jobs number, but overall remained weaker versus most of its G10 counterparts on the week.  This second half of this week’s docket is packed full of risk events that have the potential to break the dollar’s log jam.

Consumer inflation data will cross the wire on Wednesday morning, but the big event of the day will be the Federal Reserve’s interest rate decision at 2 p.m.  Fed Fund Futures show little chance of a policy change but Powell’s post-meeting press conference could make waves.  Attention on Thursday will be overseas as Brits head to the polls and Christine Lagarde holds her first meeting as ECB chief.  The US retails sales are due out Friday morning.

We will also keep a close eye on trade developments this week.  New tariffs on Chinse goods are set to kick in this weekend.  It is unclear whether two sides have made significant progress in reaching a phase-one deal.  As has been the case for all of 2019, trade remains the biggest risk to the American economy.

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

EUR

EUR/USD remains in familiar ranges as volatility in the pair remains near record lows.  Strong U.S. data and poor German industrial output did little to put a lasting dent in the common currency on Friday.  French and Italian industrial production figures are on tomorrow’s docket.  The European Central Bank meeting on Thursday will merit attention.  While the ECB is expected to keep policy unchanged, market participants will pay close as its Christine Lagarde’s first meeting as President.

GBP

The British pound was the biggest winner last week, gaining nearly 2.0% against the U.S. dollar as a slew of polls showed that the Conservative party with a healthy lead before Thursday’s election.  Polls show that Prime Minister Boris Johnson’s party with a lead of 9-13 percentage points.  If Johnson can win a clear majority, it will become much more likely that he will be able to push Brexit through Parliament.  The newest deadline for Brexit is January 31st.  While most economists see Brexit as a net-negative for the British economy, less uncertainty will have its benefits and boost the sterling.

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