Kathy Lien is Director of Currency Research at GFT, and runs KathyLien.com.
Kathy has a Bachelors degree in Finance from New York University. Kathy has written for Stocks and Commodities, CBS Market Watch, ActiveTrader, Futures and SFO Magazine. She is frequently quoted on Bloomberg and Reuters and has taught seminars across the country. She has also hosted trader chats on EliteTrader, eSignal, and FXStreet, sharing her expertise in both technical and fundamental analysis.
The US Federal Reserve has kept interest rates steady for over 6 months now and today’s data releases suggests that they could continue to leave rates at 5.25 percent for another six months.
Although the Empire State manufacturing index dipped, the US dollar failed to. In fact, the dollar’s reaction to the manufacturing index was minimal as the market interpreted the drop to be more of a catch-up move to the weakness that we saw in the Philadelphia index last month than a leading indicator for weakness nationwide.
Even though there was no US economic data released today, it does not undermine the fact that this will be a busy data week. The main focus here in the US as well as globally is inflation.
US retail sales were very strong in the month of December, but after a week of solid gains it seems that there just weren’t enough buyers out there to take the currency even higher.
Everyone in the currency market was focused on the developments across the Atlantic. In the US, we look ahead to the retail sales report on Friday, which is probably the single most important piece of data this week.
The long awaited European Central Bank interest rate decision is tomorrow morning and the Euro is weak going into it, which means that should there be any upside surprises, the EUR/USD has plenty of room to rise.
The currency market never likes uncertainty, especially at such a geopolitically sensitive time, which explains why traders sold the US dollar after hearing news that an unexplained gas odor is circulating in the air in New York City.
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