The markets picked up where they left off last year. The release of the FOMC minutes from the December meeting and President-elect Trump's tweets impacted prices and almost overshadowed the release of the biggest economic indicator: the non-farm payroll report. The U.S. Federal Reserve published the minutes from its December meeting.
The last policy meeting of the year brought the second rate hike in the current tightening cycle. The views from Fed members who voted unanimously for a rate hike is now in line with that of the market. Although the Fed is non-partisan it did read the writing on the wall regarding the infrastructure spending on its way via President-Elect Trump and will move to pro actively contain inflation with two to four rate hikes this year.
The non-farm payroll released on Friday, Jan. 6 fell short of expectations with a 156,000 new jobs added to the economy, but with the mixed news of a post-crisis high in terms of wages with a 2.9% year over year increase it was a positive for the American currency as another sign of diminishing slack in the economy.
The U.S. retail sales data will be released on Friday, Jan. 13 at 8:30 am EST. Forecasts call for an improvement in the total value of sales in the United States in December. The American Producer Price Index (PPI) data will also be published on the same day. The preliminary Consumer Sentiment compiled by the University of Michigan will be posted at 10:00 am EST. The market expects a mixed bag of economic releases, as December was a good month for retailers but not as positive for producers.
The euro/U.S. dollar (EUR/USD) currency pair lost 0.02% in the last week. The pair is trading at 1.0528. The single currency was mostly flat despite having a swing of 2.7% during the week. The pair traded in a range as high as 1.0623 and as low as 1.0340. The USD lost some traction after closing strong 2016 with a rate hike announcement by the Federal Reserve. The central bank once again forecasted multiple rate hikes and along with the words of the President-elect it made for an expectation of higher growth and inflation. The return from year end holidays were not kind to the USD who lost some ground until the minutes from the Fed meeting were released and it recovered most of the ground lost even with a tepid jobs number on Friday.