Dollar Bounces After Insurrection Put Down

America

President Trump appears to have signaled a "peaceful transition" after yesterday's chaos in the capital that shocked and dismayed (if not scared) the nation and world.  Nevertheless, order has been restored, and there are reports of numerous staff resignations.  Although there is talk of impeachment or invoking the 25th amendment to replace Trump with Pence, don't expect much to come from it.  At most, Congress may censure the President for seemingly encouraging yesterday's actions and continues to press with the "election was stolen" rhetoric.  Net-net, the economic consequences of the political theater are likely very limited.  

The US reports weekly jobless claims.  A small rise is expected, but the holiday-period may have distort, and the national employment report tomorrow trumps today's report.  The US also reports November trade figures.  The average monthly shortfall through October was $53.67 bln in 2020.  This is roughly 10% larger than the average in the first 10-months of 2020 (~-$49 bln).  Lastly, the US also sees the December ISM services index.  A decline from November's 55.9 reading is expected.  

Canada reports its November trade figures today too.  Through October, its monthly trade deficit has averaged C$2.96 bln in 2020.  It is almost double what it had averaged in the first ten months of 2019 (~-C$1.49 bln).  Unlike its southern neighbor, it does not blame current account surplus countries for its deficit.  Canada's IVEY survey is also on tap, but it tends not to be a market-mover.  Tomorrow, it reports December jobs, which are expected to have fallen by around 30k after rising 62k in November.  Mexico reports December CPI figures, and the year-over-year pace is expected to have slipped for the second month after peaking near 4.10% in October.  

The US dollar is recovering from a new low since April 2018, recorded yesterday near CAD1.2630.  In Europe, it is trading above yesterday's high (~CAD1.2725).  A move above CAD1.2800 would suggest the anticipated greenback correction may be at hand.  Similarly, the US dollar is recovering against the Mexican peso after falling to its lowest level since last March (~MXN19.60).  The week's high is around MXN20.10.  Consolidation may be on tap, and the intraday technicals suggest the MXN19.90 area maybe a sufficient cap today.  

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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