Currencies: $ and Yen break away, Euro loses ground – 2024-01-29

The dollar recovered well, rising +0.25% to 103.70 for the Dollar-Index.
A rise that could have been even more marked had it not been for the yen’s strong recovery against all currencies (+0.4% against the dollar (to 147.6), +0.7% against the euro, +0.5% against the pound).

The euro was the red lantern on Monday, losing -0.4% to $1.0805 and -0.3% against the pound and the Swiss franc (at 0.9340, less than 1% from its historic low of 0.9250 on 12/29/2023).

The dollar is strengthening ahead of an avalanche of key macro indicators (culminating this Friday in the NFP, or US employment report for January), followed by the Fed’s decisions expected on Wednesday.
The US central bank has made it clear that it plans to cut interest rates in 2024, and the question now is when, by how much and at what pace.

‘Powell should leave the door open to the possibility of a rate cut in March, while avoiding reinforcing the likelihood of such a scenario for the time being,’ says Jim Reid, market analyst at Deutsche Bank.

According to the FedWatch tool, only 48.6% of traders now anticipate a rate cut in March, with 50.4% expecting a further ‘status quo’.
In Europe, the week will be punctuated in the euro zone from Tuesday by the publication of GDP for the fourth quarter, followed by consumer prices in the region, expected on Thursday.

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