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Market Reports

8:31am, January 7th 2019

Dollar weakens as Powell pushes patience message, fresh week of data commences…

Last Friday saw a weaker US dollar despite an exceptionally strong jobs report. 300K+ jobs were added in the month of December according to the latest non-farm payrolls report. Further to this, average hourly earnings increased too, another sign of a healthy economy. The only downside was an increase in the unemployment level from 3.7% to 3.9%. However, this was matched off by an increase in the participation rate. All of this should have given the buck a reason to rally against its peers. This was prevented by Fed chair, Powell, who appeared on a panel, being interviewed alongside his predecessors Janet Yellen and Ben Bernanke. Comments which reversed course for the greenback and actually caused it to lose value on the day included: if needed the Fed would change its balance sheet reduction, crisis-era tools worked and he’s prepared to use them if needed and that the Fed is trying to engage the public to explain itself. These comments reassured markets and put them into risk-on mode which, by nature, pushes flows outside of the USD. Further to this, Powell pushed a message of patience across 2019, something markets clearly appreciated.

This week sees a focus back on Brexit as Parliament returns from recess. The meaningful vote on May’s deal is scheduled for the week commencing January 14th. However, rumours are floating around that this will once again be delayed even further as May attempts another last minute manoeuvre. Additional focus will be on the latest round of Federal Reserve meeting minutes scheduled for Wednesday evening. Chair Powell will also speak at the Economic Club of Washington on Thursday. US inflation numbers will also be watched out for – these are released Friday at lunchtime. From across the border, a Canadian interest rate decision will be monitored closely. Last but not least, close attention will be paid on ongoing trade talks between the US and China.

Written by Viv Savani. 8:31am, January 7th 2019

The details expressed in this market report are for information purposes only and are not intended as a solicitation for funds or a recommendation to trade. Cornhill International Payments limited accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the above information.

Previous Reports

8:30am, April 24th 2019

Aussie heads lower after soft inflation, RBC rate decision on tap…

View Report
8:32am, January 8th 2019

FX markets begin the week on steady footing…

View Report
8:38am, January 31st 2019

Fed tilt dovish…

View Report

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