Market Brief, North America

The greenback appears to be following its New Year resolutions rather well, on course to end the week at a lower weight after investors received confirmation of easing price pressures in the United States and evidence of surprising resilience in other major trading blocs. The trade-weighted dollar is down almost 1.5 percent this week, and has fallen more than ten percent from its September highs. Yesterday’s inflation numbers were almost precisely aligned with median economist forecasts, but markets reacted nonetheless. Yields jumped and the dollar spiked higher in the moments after the release, and then round-tripped lower less half an...

Markets are on high alert ahead of what might be the post-pandemic world’s most consequential economic data release: the US consumer price index. Consensus estimates suggest headline prices fell 0.1 percent month-over-month in December, decelerating to 6.5 percent annualized from 7.1 in the month prior. Excluding food and energy, prices are expected to rise 0.3 and 5.7 percent. The risk of a violent adjustment in foreign exchange markets is real: an above- or below-consensus print could trigger a reappraisal of the odds on a 50 basis point hike at the Federal Reserve’s February meeting, and unleash sharp short-term moves in...