Macro Roundup (Jan 14)

SHANGHAI, Jan 14 (SMM) – This is a roundup of global macroeconomic news last weekend and what is expected today.

Last weekend

The US dollar gained against the euro, boosted by technical factors after the euro met key resistance levels, even as the greenback’s outlook remained bleak amid cautious signals from the US Federal Reserve about further rate hikes.

“It seems like we’re getting some model and stop-loss buying on the dollar after the euro hit resistance on the upside,” said John Doyle, vice-president of dealing and trading at Tempus Inc in Washington. “The sharpest move was in euro/dollar and it has become this across-the-board buying of the dollar,” he added.

Shaun Osborne, chief FX strategist at Scotiabank in Toronto, cited cyclical, structural and secular trends, which could also pressure the dollar in 2019. “The outlook for relative central bank policy has reached its climax in terms of offering the US dollar support, and widening fiscal and current account deficits are expected to deliver medium-term weakness in the currency,” he said.

LME base metals rose for the most part while SHFE contracts ended mixed last Friday. LME nickel surged over 2%, zinc and lead rose over 1%, copper grew 0.69%, tin went up 0.59%, while aluminium fell 1%. SHFE nickel jumped 1.01%, zinc gained nearly 1%, tin gained 0.79%, while lead dipped 1.53%, aluminium slid 0.52%, and copper closed 0.23% lower. 

A sharp fall in prices of gas lowered the US consumer price index (CPI) for the first time in nine months in December. Underlying inflation pressures remained firm as rental housing and healthcare costs rose steadily.

The Labor Department said on Friday that its CPI dipped 0.1% month on month in December, the first drop and weakest reading since March. The CPI remained unchanged in November. On a yearly basis, the CPI rose 1.9% after it gained 2.2% in November.

Excluding the volatile food and energy components, the CPI increased 0.2%, advancing by the same margin for a third straight month. Compared to the same period in 2017, the so-called core CPI rose 2.2%, matching November’s increase.

“Overall, inflation risks remain well in check and are well down the list of potential concerns for both the capital markets and the economy,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors. “That bodes well for 2019 if the Fed can slow the pace of rate hikes or pause outright.”

Day ahead

Economic data slated for release today include China’s trade balance, import and export data for December.