American FX Outlook: Empire State manufacturing activity headlines

Mario Blascak, PhD Independent Analyst

What you need to know before markets open:

After prolonged weekend for Americans the US Dollar opens the holiday-shortened week in a corrective mode after falling lower for four days in a row.
Berlin chamber of German Social Democratic Party reportedly voted against formal coalition talks with Angela Merkel’s CDU/CSU putting the chances of a new government in doubts.

Tuesday’s market moving events

The US Empire State manufacturing index is expected to remain unchanged at 18 in January.
As the US Government shutdown nears (January 19) political discussions are heating up, with markets pretty much sure that the deal will be done by Friday.

Major market movers

After four days of losses, the US Dollar correcting higher rising 0.4% on US Dollar index basis.
The EUR/USD was under pressure falling 0.5% on Tuesday after reports of Berlin chamber of German Social Democratic Party reportedly voting against formal coalition talks with Angela Merkel’s CDU/CSU.

Earlier in Asia/Europe

German consumer inflation rose 0.6% over the month and 1.7% y/y in December.
German wholesale prices rose 3.5% on average in 2017 compared to 2016.
The UK inflation decelerated to 3.0% y/y in December, with core inflation also decelerating to 2.6% y/y.
The Bank of England Deputy Governor Sam Woods said the Bank’s contingency planning will be stepped up if there is no Brexit transition agreement by the end of Q1.
Czech central banker Benda said that planned releases of FX rate outlook in new forecasts are not a manual for investors on crown development.

Author

Mario Blascak, PhD

Independent Analyst

Dr. Mário Bla&scaron;čák worked in professional finance and banking for 15 years before moving to journalism. While working for Austrian and German banks, he specialized in covering markets and macroeconomics.

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