Thursday January 24, 2019

USD: The US Dollar Index rallied sharply overnight on weaker EUR due to interest rate concerns. Yesterday’s Redbook Index was a higher than expected 7% indicating surprising consumer spending strength. However, the overnight rally is a bit overdone, so look for a pullback by the end of the day.

CAD: CAD is quiet this morning and is range bound to slightly weaker with a possible decline to 0.745 cents. Bank of Canada’s Poloz, speaking in Davos, discussed the potential of lower rates if oil prices or the economy weakened. The BoC has raised rates five times in 2018 on strong growth but has now moderated this view.

World: EUR is testing the lows. The up-coming European Central Bank meeting has the market worried about its interest rate policy. The ECB has steadily lowered rates to 2% over the last 10 years to stimulate poorer performing countries with little success. Now the power-houses Germany and France are starting to falter.

Key Economic Numbers:                    Forecast   Previous

US Initial Jobless Claims:                      221,000     213,000

Economists keep expecting Jobless Claims to be higher due to the government shutdown, but they haven’t shown up yet. A number below 213,000 would be a surprise sending the USD Index higher.