- Markets eye the UK
- Fed speeches dominate week’s schedule
- Fed official wants rates to pick up the pace
- Goldman Sachs calls for euro/dollar parity in 2017
Continued debate swirls around the path of the United Kingdom’s planned departure from the Eurozone. Prime Minister Theresa May is not tiptoeing around how she views the path of Brexit: In an interview with Sky News she stated “We are leaving. We are coming out. We are not going to be a member of the EU any longer.” Investors are seeing this as a very discouraging development, and the pound has fallen significantly in response.
In the United States, Boston Fed President Eric Rosengren is cheering U.S. dollar bulls. “I believe that a still gradual but somewhat more regular increase in the federal funds rate will be warranted,” he stated in a meeting with the Connecticut Business & Industry Association. Current widespread expectations are that the Federal Reserve will raise rates thrice in 2017. Although Rosengren is no longer a voting member of the Federal Open Market Committee, his comments are certainly encouraging for those looking for a rising greenback in 2017.
Rosengren isn’t the only Fed member in the public eye this week. Lockheart, Evans, Harker, and Janet Yellen are all speaking during the week. Investors will certainly be looking to glean clues about rate hike projections from their statements. Goldman Sachs’s chief economist Jan Hatzius believes that the market is underpricing the rate hike path for this year; he anticipates Eurodollar parity in 2017.
EURUSD: Euro is roughly even with the dollar this morning, as other currencies are more in investors’ focus.
GBPUSD: Sterling is down over a percent at time of writing. Concerns over a hard Brexit have been rekindled following Theresa May’s comments.
AUDUSD: Aussie dollar has gained against around half a percent against its U.S. cousin in early trading.
USDCAD: U.S. dollar is roughly even with Canadian dollar today. Although U.S. dollar has weakened against most currencies, crude oil’s 2% fall is holding back the loonie.