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Screenshot of a breaking news alert e-mail from Q2 2017
Last night’s Fed minutes reinforced US policymaker expectations that we could well see multiple rate rises this year after last month’s rate rise, though officials remained cautious given the lack of clarity on the type of fiscal expansion that might be forthcoming in the coming months.
In contrast to last year, this week’s data would appear to suggest that while pricing pressures are on the up Fed officials seem a lot less certain about the glide path of future projected rate rises.
This may well explain why the US dollar has sold off sharply from this week’s new 14 year peaks, with the Yuan in particular surging, against a backdrop of concerns about the impact of a stronger currency, and a lack of clarity on the new US administrations upcoming fiscal plans. The surge in the Yuan may well have been exacerbated by reports that Chinese authorities are placing curbs on capital outflows, along with a failure to crack the 7.00 level, prompting a bout of profit taking.
US markets meanwhile still seem intent on trying to make recent attempts at new record highs with the Dow once again falling short of the 20k level. Another failure here may well prompt a bit of a sell-off in the short term, while a weaker US dollar could well see european markets drift off as well after this week’s new highs, according to CMC Markets.
The UK remains in focus today with the latest December services PMI numbers set to bring the curtain down on a better than expected Q4 for the UK’s economy.