January 16, 2023
United States:
US Dollar Shorts Become Favorite Trade as Fed Seen Slowing Hikes
The dollar’s rally from an eight-month low could be fleeting as the growing view that the Federal Reserve will slow the pace of interest-rate hikes is likely to keep selling pressure on the US currency.
The Bloomberg Dollar Spot Index made slight gains on Monday, but remains down nearly 2% since the start of the year as investors have sold the greenback in droves. Easing US inflation expectations has prompted funds to ditch the ultimate haven asset, triggering a rebound in most major currencies.
Europe:
European Stocks Rise as US Futures Signal Caution: Markets Wrap
A gauge of global equities faltered after its best start to a year in a generation as investors assessed whether the rally has gone too far given the outlook for inflation, growth and earnings. European stocks rose modestly.
The MSCI ACWI Index slipped for the first time in seven days after posting the biggest advance for the first two weeks in data going back to 1988. Futures on the S&P 500 and Nasdaq 100 indexes fell at least 0.2% each. The dollar snapped a three-day losing streak. US spot markets were closed for a holiday. Bond yields across Europe climbed.
Asia:
China’s GDP Report Set to Show Damage From Covid Zero Exit
China’s key economic data this week will likely show a marked weakening in growth at the end of last year after the Covid Zero policy was abruptly ended, although attention is quickly shifting to a strong rebound in 2023.
A surge in infections in December took a toll on the economy, with official data Tuesday likely to show a slump in activity to levels comparable to when Shanghai was locked down in the spring last year.
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