Article Highlights

  • U.S. labor market conditions index down from 2.1 to -0.3 in Dec
  • U.S. consumer credit increased from $16.2B to $24.5B vs. $18.3B forecast
  • Fed official Lockhart: Potential upside bias from fiscal stimulus, three hikes possible
  • Fed official Rosengren: Fiscal policy too difficult to predict, too early to talk about rate hike timing
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The Greenback’s performance was as mixed as the reactions to Jimmy Fallon’s Golden Globes hosting stint, as the currency simply reacted to country-specific factors.

Major Events:

Mixed medium-tier U.S. data – You win some, you lose some. While the U.S. economy reported a strong surge in consumer credit from $16.2 billion to $24.5 billion in November, outpacing the consensus at $18.3 billion, the Fed-measured labor market conditions index slumped from an upgraded 2.1 reading to -0.3 in December.

The consumer credit report revealed that folks swiped their plastic left and right during the holiday shopping season right around Thanksgiving. As it turns out, credit card spending accounted for $11 billion in gains likely due to online shopping activity.

Remarks from Fed officials – Forex junkies continue to pay close attention to remarks from U.S. central bank officials in order to gauge the timing of interest rate hikes this year. So far, only non-voting members Lockhart and Rosengren have stepped up to the podium so things should get a lot more interesting when the actual FOMC committee members grab the mic.

Still, it’s worth noting that Fed official Lockhart sees potential upside pressure from the incoming Trump administration’s fiscal policy changes, adding that he’s seeing hints of positive investment activity and sustained momentum in achieving full employment. He did suggest that two rate hikes sound more reasonable for this year but added that three is still a possibility.

Fed official Rosengren, who’s out of the FOMC voting rotation this year, mentioned that the government’s fiscal stimulus is too difficult to predict at this point and that it’s too early to discuss the timing of rate hikes. He did warn that inflation could become excessive if the Fed avoids tightening when necessary.

Major Market Movers:

GBP – Sterling was unstoppable in its dive from earlier trading sessions, bogged down by U.K. Chancellor Hammond’s remarks that Brexit talks should be completed by April 2019.

GBP/USD proceeded to sink to a low of 1.2126 before treading sideways, GBP/JPY dropped from 142.31 to a low of 140.94, EUR/GBP popped up from .8650 to a high of .8725, and GBP/AUD slumped to the 1.6500 mark.

Watch Out For:

  • 12:30 am GMT: Australian retail sales (0.4% expected, 0.5% previous)
  • 1:30 am GMT: Chinese CPI y/y (2.2% expected, 2.3% previous)
  • 1:30 am GMT: Chinese PPI y/y (4.6% expected, 3.3% previous)
  • 5:00 am GMT: Japanese consumer confidence index (41.3 expected, 40.9 previous)

See also:

London Session Recap

Asian Session Recap

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