The dollar posted a small decline against most major currencies on Monday, with the dollar index (USDX) ending the session 0.20% lower, ahead of a busy economic calendar that could provide some indication regarding the timing of the Fed’s first step towards monetary easing.
According to the CME Fedwatch tool, the possibility that the first rate cut in 2024 will take place in the May FOMC meeting is at 15% while the same possibility for a rate hike taking place in June is at 53.4%.
Wall Street’s appears to be taking a breather on Monday, with all three main stock indices ending the session with a small drop, as investors are waiting for more cues from the upcoming PCE price index data released on Thursday. In company news Domino’s Pizza stock soared over 5% after reporting quarterly results that topped expectations while Berkshire Hathaway fell 1.7% despite posting its second straight record annual profit, bringing it closer to a $1 trillion market value.
Several big market players announce their Q4 earnings reports today among which are Gaotu Techedu, Norwegian Cruise Line, AMERICAN TOWER, XP Inc., Splunk, EventBrite, Lemonade, eBay, Beyond Meat, Coupang and Virgin Galactic while other key releases in the week ahead include Best Buy, Dell, Nio, Plug Power, Paramount and Novavax.
On the energy front, the two main crude benchmarks WTI and Brent both rose by 1.58% and 1.31% respectively on Monday, supported by escalating geopolitical tensions in the Middle East, as a new flurry of strikes raises concerns over possible supply disruptions.
For today, investors focus could shift towards core durable goods orders from the US, the S&P Composite-20 Housing Price Index, US consumer confidence data and the Richmond Fed manufacturing index.
Some price action could be observed in the week ahead, upon the release of Japanese inflation numbers and Chinese purchasing managers index data keeping investors on edge, as concerns persist over slowing growth in the region’s largest economies. Another key event taking place during the week is the PCE price index data which is the Fed’s preferred inflation gauge. In addition, several Fed officials are due to speak on the outlook for monetary policy.