Meanwhile, Richmond Fed President Tom Barkin is cautioning that any interest rate changes should be carefully considered based on the data, as there is a risk of missing our targets for employment and inflation.
And on top of all this, we’ve also got US President Donald Trump about to name a new Fed Chairman, which is adding even more uncertainty to the monetary policy outlook. According to the CME Group’s FedWatch, a pretty reliable tool, there’s currently an 82.8% chance the Fed will leave rates as they are at its meeting in mid January.
Economic Data is Top of Mind
Watch out for US ADP Employment Change and ISM Services PMI for December – both out later today. ADP is expected to show a small increase of 50,000 private sector jobs – that’s better than last month – and ISM Services is forecast to stay above 52, which is a good sign for the services industry.
Then on Friday, it’s Nonfarm Payrolls ( NFP) where job gains of 55,000 are expected – that’s a bit fewer than last month. And market expectations could get turned on their head depending on the numbers, so that traders will be keeping a close eye on these releases.
Geopolitical Tensions Just Aren’t Providing The Support You’d Expect
Usually, when there’s some safe haven demand, the dollar does okay – but with all the tension in the world, like the US and Venezuela, it’s had hardly any effect on the market so far. It’s mostly been the Fed’s policy & the upcoming reports that have traders most focused.
And not helping matters is that Fed officials are sending out mixed messages on rate cuts, so that’s just putting more pressure on the dollar – but still the DXY is struggling to hold onto its recent gains despite traders still being pretty cautious.
