From Marc Chandler at Bannockburn Global Forex:
The market extended the greenback’s recovery when Treasury Secretary Bessent told the CNBC audience that the US always supports a strong dollar. However, the market was not fully buying it from the administration, which seemed to offer verbal support for Japan at the end of last week, and the president saying he was unconcerned about the dollar that had been selling off hard and continued to call for lower interest rates.
Although there was some volatility after the unsurprising FOMC meeting and fairly uneventful press conference, the upside dollar correction momentum seen earlier in the day had all but disappeared by the close. Follow-through selling initially extended the dollar’s losses, but it recovered and now is little changed in late European morning turnover. The intraday momentum indicators are overextended, and the North American market showed a penchant to sell the dollar after the FOMC meeting. Meanwhile, the US “armada” is amassing near Iran, and this is the source of immediate geopolitical tensions that has lifted oil prices to four-month highs.
Prices
G10
• The euro’s pullback extended after the Federal Reserve’s statement and decision to keep policy unchanged. The euro briefly traded below $1.19 before buyers emerged. It recovered to a little through $1.1950 before the North American close. It reached almost $1.20 in Asia Pacific turnover but slipped back slightly below $1.1940 in Europe. Intraday momentum indicators are stretched as the North American session is about to begin.........Data
•With the US economic growth apparently accelerating in Q4 25 and price pressures firm, it is hardly surprising that the Fed stood pat yesterday. The limited Fed funds futures and interest rate response to the FOMC decision and the press conference suggests the Fed delivered what was expected. The Atlanta Fed GDP tracker is for 5.4% growth in Q4. The model and bank economists will likely fine tune GDP projections after today’s data, which include November trade, factory orders, and wholesale inventories. US trade balance has been distorted by gaming tariffs and precious metal trade. That said, the deficit likely grew in November for the first time in four months. We already know that durable goods orders were flattered by Boeing orders, and this will likely be picked up in the factory goods orders. Wholesale inventories are expected to have risen for the third consecutive month in November. rose by 0.2% in November. Weekly jobless claims may have posted their first back-to-back gain since late September/early October. January nonfarm payrolls will be reported next Friday, February 6. Early forecasts have crept up to about 70k (50k in December)....
....MUCH MORE
