Trump Pins back the USD, will the FED do the same?

Daily Update - 31st January 2018

Yesterday’s Focus

• EUR Harmonized Index of Consumer Prices, GDP, Services Sentiment, Industrial Confidence, Economic Sentiment Indicator
• GBP Consumer Credit, Mortgage Approvals & BOE Governor Carney Speech
• USD S&P/Case Shiller Home Price Indices

Yesterday’s Explained

Eurozone GDP came in meeting expectations but provides little boost to Euro. It's seems that solid growth data from the region is becoming a norm. BoE Carney boosts sterling as Carney testified before the Parliamentary Special Committee late in the European session, giving a positive update on the UK economy, in light of wages increasing, and the economy being close to full capacity, despite the uncertainties of Brexit.

Today’s Focus

• EUR Markit Manufacturing PMI
• USD Labour and Jobs data, ISM Prices Paid and ISM Manufacturing PMI, FED’s Monetary Policy Statement, FED Interest Rate Decision

Today’s Market

The EUR calendar for today also remains quite eventful, with the German retail sales and jobs data due on the cards ahead of the European open while the Eurozone flash CPI estimate and the unemployment rate will be reported later. We have no macro news from the UK docket today, and hence, the pound will remain at the mercy of the Brexit headlines and USD dynamics.

Moving on, traders will gear up for the Canadian GDP release alongside a batch of the US economic releases, which include the ADP jobs report, FOMC rate decision is the main focus of the day. While it is widely expected that no change would be made in the monetary policy, the market focus is on the Fed's economic outlook and whether there are hints on the rate hike path. Notwithstanding the fact that inflation has remained soft, the robust employment market, with unemployment rate below the Fed's long-term target, should have anchored the Fed's confidence over the economic outlook. We do expect the Fed to address the issue recent USD weakness