Analysts at Societe Generale note that the US Dollar stages a broad retreat early Wednesday ahead of key data releases.
Macro calendar picks up pace today
“The brace of below forecast inflation data from France and Germany may not reshape policy tactics at the ECB but the speedier drop in prices will fuel hopes that perhaps inflation trends could improve more quickly in 2023. It is early days of course and reports over surging food prices and faster wage growth could keep core inflation rates elevated. The reduction in energy gas bills in Germany will not be repeated next month and means that inflation will probably return to double digits in January.”
“The macro calendar picks up pace today with the US manufacturing ISM, JOLTS job openings and FOMC minutes. A flurry of client enquiries followed the intra-day 1.5% swoon from high to low yesterday in EUR/USD but buyers emerged on the dip overnight.”
“The dollar stages a broader retreat on higher stocks in HK and China. Besides the correlation with risk assets, a reopening of the Chinese economy and boost to European trade can galvanise gains for the single currency. The US macro releases today and NFP on Friday should provide a clearer view of whether the tactic of selling dollar rallies remains pertinent or is losing its appeal. The price action this morning suggests it is the former. The FOMC raised the dot plot for 2023 through 2025 last month, with interest rates staying restrictive for the next three years.”
