The US dollar began Friday’s session in a weak spot, hitting fresh 4-month lows as the aftermath of a very dovish Fed Chair Powell continued to reverberate across all asset classes. Late in the day the $ got a boost after NY Fed President Williams pushed back against the market’s current excessive pricing for rate cuts next year, stating “It's premature to be even thinking about March cuts”.
Elsewhere PMI data out of Europe came in much weaker than forecast, as did UK manufacturing. One bright spot was UK Services data which came in higher than forecast.
Market rates
* Daily move - against G10 rates at 7:30am, 18.12.23
** Indicative rates - interbank rates at 7:30am, 18.12.23
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US Interest rate cut expectations hit a new high on Friday before pushback from the NY Fed. With markets still pricing in a 150 bps of cuts for next year there is plenty of room for disappointment. ECB’s Holzmann also sounded hawkish stating “There was no discussion of a change to rates at latest meeting” and that “the majority said there are risks to the upside on inflation”.
This week is relatively quiet on the economic data front with EU, UK and US inflation the highlights.
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