Trump Rouses the Dollar Bulls ahead of Today’s State of the Union Speech

Daily Update -30th January 2018

 Yesterday’s Focus

• USD Core Personal Consumption Expenditure, Personal Income & Personal Spending

Yesterday’s Explained

The EUR/USD price fell yesterday due to the US dollar appreciating. The increase of yields in American Treasuries is increasing trader interest in the greenback. On the other hand, pressure for the USD is coming from the lower than expected pace of US economic expansion of only 2.6% in the fourth quarter against the 3.0% forecasted. yesterday, the mood of traders has been influenced by macro statistics, on personal income in the US which increased by 0.4% in December, 0.1% more than forecasted. But on the flipside, personal spending grew by only 0.4% compared to the 0.5% expected.

today some volatility growth is possible after the release of the French and Spanish Gross Domestic Product reports. Moreover, the main impact is likely to come from the news on the European economic expansion during the previous quarter. The central event of the week, which may restrain investors from making any active moves will be the NFP labor market report in America that will be published on Friday.

Today’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

Today’s Market

Economic data out of the Eurozone this morning, includes 4th quarter GDP numbers out of France, Spain and the Eurozone, together with December retail sales figures out of France and prelim January inflation figures out of German. Focus will be on the GDP numbers this morning that could revive the EUR rally should the numbers impress, with the markets likely to respond to any uptick in inflation, though German consumer prices are forecasted to ease back in January, according to forecasts.

For the Pound, there are no material stats to provide the Pound with direction, with Brexit noise and Dollar strength weighing on the Pound at the start of the week. BoE Governor Carney could shift sentiment later today, if there is any hawkish monetary policy talk, though gains may be short lived, with market focus remaining on Brexit progress for now. The House of Lords debate on the EU Bill may add further downward pressure on the Pound, if Carney’s unable to revive the Sterling rally.

Across the Pond, key stats through the U.S session include January consumer confidence and November house price figures.

While an uptick in consumer confidence will provide further gains for the U.S Dollar, the key driver through the early part of the week has been a more hawkish sentiment towards FED monetary policy ahead of tomorrow’s FOMC statement release.