The US Dollar had a dramatic week which saw it fall a net 1.7% against a basket of major currencies. Its index opened last Monday morning around 90.25 but after the US Trade and Treasury Secretaries unleashed their own particular brand of Alpine diplomacy at the WEF in Davos, it hit at a fresh low on Thursday of 88.20; its weakest since early-December 2014. Later that evening, in an interview with CNBC, President Donald Trump said, "the dollar is going to get stronger and stronger and ultimately, I want to see a strong dollar,", further adding that Treasury Secretary Steven Mnuchin's comments were taken out of context. After he then delivered his “America First but not Alone” speech to a packed conference hall in Davos on Friday, the USD steadied somewhat to end a very dramatic week at 88.70.
The week ahead brings plenty of news on the US economy as well as Dr Janet Yellen’s last meeting as Chairman of the Federal Reserve Bank. Market-derived probability estimates show just a 3% chance of a 25bp hike in rates, with the overwhelming view being this will not come until the March 21st FOMC meeting. On Tuesday we get the latest reading on consumer confidence, Wednesday it’s the Chicago NAPM then on Thursday the ISM manufacturing survey. The first Friday of the new month, as usual, is the labour market report where consensus estimates are for non-farm payrolls to have increased about 180k with the unemployment rate steady at 4.1%.
After President Trump’s sales pitch to the world leaders in the Swiss Alps, tomorrow is his opportunity to pitch to a domestic audience. When the President delivered his first address to US Congress last year, it was technically not termed a State of the Union speech because he had only been on the job for five weeks. In a Press briefing on Sunday, a senior administration official told reporters that when Mr Trump speaks at 9pm EST on Tuesday, laying out future plans and reflecting on his first year in office, he will be “speaking from the heart” to discuss jobs and the economy, infrastructure, immigration, trade and national security. The speech is titled, “Building a safe, strong and proud America”. The US Dollar index opens ahead of this very busy week at 88.80.