Dare we say it? Still the Dollar story.
The big event last week was the US jobs report. It was the big event because wages missed the forecast boat of 2.8%, 2.6% printed, which lends support to stocks and that immediately put me long SnP`s yet again from 2755 and I am holding them with a view to add for another record high which could come during the course of this week. The jobs report re-ignited the 3 or 4 hikes for 2018 debate for investors with Fed doves urging steady progress and hawk Rosengren rounding the debate with a step into the 4-hike camp upon the US fiscal boost. Friday was the last chance for Fed-heads to signal their stances on hikes as the media embargo started ahead of the FOMC meeting 21st March.
Other news over the weekend: China and Germany warn President Trump that tariffs threaten global trade. Germany wants a Europe-wide response to the threat and Chinese Commerce Minister signalled strongly that a trade war with the US would only bring disaster to the world economy. Strong responses that put the risk-averse Yen at the top of the G8 pile of currencies. The Moritomo scandal added to Yen appeal. Gold poised.
UK`s Chancellor, Philip Hammond said on Sunday that he might be able to relax his firm hold on the public purse but warned that this week`s spring statement would not hold any promises and that markets would have to wait for the autumn budget statement for and changes in policy. He said that wiping the deficit was a long-term aim, pushing back expectations for definitive improvements to the mid-1020`s from it`s current levels of 84% of GDP and £1.7 trillion.
Bank of International Settlements (BIS) told Central Banks to not allow the recent volatility deter CB`s from raising interest rates. This with special reference to the recent jitters caused by trade war worries, pointing out that the recent markets turbulence had not altered the broader picture of growth across world economies.
UK consumers tightened their belts in February as reported by Visa, giving the weakest start to the year since 2012. Visa said that inflation-adjusted consumer spending in February was 1.1% lower Y-o-Y from this time last year. That is after a 1.2% decline in January, pointing to the broader economy slowing in the 1st quarter of 2018.
The Dollar Index (DXY) eased during Asia to the 89.90 area and is currently enjoying a tepid bounce, stuck around the 90 handle and seems reluctant to improve on that. If 89.85 fails to hold, then 89.42, Thursday`s low comes into focus. A break of 90.36, Friday`s high, is needed to signal further advances beyond the psychological 90.50.
Highlight on the docket this week has to be US CPI`s due tomorrow 13the March.
We have the US Budget later today where some volatility might emanate from the tax laws implications.
US PPI`s, retails on Wednesday might add more fuel to the wages fire amidst the USD story that dominates FX-markets.