Talking Points:

US Dollar May Not Find Upside Driver in Firming UofM Consumer Confidence
Aussie, NZ Dollars Followed China’s Shanghai Composite Lower in Asian Trade
Pound Soared as UK Retail Sales Unexpectedly Grew the Most in Over 5 Years

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The US Dollar lost a bit of momentum yesterday following the release of US CPI and Jobless Claims data, as expected. The former report printed in line with expectations while the latter offered something of a mixed message. On balance, these results did little to dislodge the emerging status quo in investors’ Fed policy expectations, opening the door for corrective profit-taking in the context of the greenback’s gains since the beginning of the week.

Looking ahead, the spotlight is on the preliminary estimate of January’s University of Michigan gauge of US Consumer Confidence. Expectations call for a pickup in sentiment, with the index seen rising to a six-month high of 83.5. A print broadly in line with expectations is likely to be treated as reinforcing established QE “taper” bets and may see the Dollar correcting lower as the rally from earlier in the week continues to be digested. Indeed, it would probably take a particularly strong upside surprise to reignite upward momentum in the benchmark currency into the final hours of the trading week.

The New Zealand and Australian Dollars underperformed in overnight, following China’s benchmark Shanghai Composite stock index lower. The British Pound outperformed after UK Retail Sales unexpectedly soared 2.8 percent in December, beating expectations calling for a meager 0.3 percent increase and marking the last monthly increase in over five years.

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Asia Session:

GMT

CCY

EVENT

ACT

EXP

5:00

JPY

Consumer Confidence Index (DEC)

41.3

43.2

42.5

5:30

JPY

Nationwide Dept. Store Sales (YoY) (DEC)

1.7%

–

2.4%

5:30

JPY

Tokyo Dept. Store Sales (YoY) (DEC)

3.6%

–

3.9%

Euro Session:

GMT

CCY

EVENT

EXP/ACT

IMPACT