US Open Note – Dollar’s rally slows down; euro loses ground

Melina Deltas, XM Investment Research Desk

US dollar advances marginally; ADP employment in surprise jump

In the United States, a relief package of $1.9 trillion may be a good sign for the economy, providing significant stimulus without overwhelming the market with unnecessary bond issuance.

The release of the ADP employment data will give some clues for the non-farm payrolls report on Friday. The report surprised as private payrolls increased by 174K in January, beating the estimates of an increase of 49K, and recovering from a downwardly revised 78K decline in the previous month. The dollar index is still moving slightly higher, remaining above 91.00. Also, dollar/yen is creating the sixth consecutive green day, while US stocks are gaining ground again.

Euro continues the decline after Eurozone CPI

The euro continues to trade around the two-month low around 1.20 against the US dollar after the annual inflation rate in the Euro area for January climbed to 0.9% from -0.3%, the highest rate since February 2020, and ending 5 months of deflation. Core consumer prices increased 1.4% in January over the same month in the preceding year. Producer Prices decreased 1.1% for December versus a 1.2% decline before.

Is Mario Draghi the new Prime Minister of Italy?

After Minister Conte failed to rebuild a coalition, Mario Draghi will have a meeting with President Mattarella to discuss the possibility to be the next Prime Minister of Italy. If Draghi is then able to successfully form a new government, this would help the integration within Europe and underpin confidence in the country’s economy.

Coming up next

Later, the US will release January’s Markit services PMI, which is expected to remain unchanged at 57.5 and the Markit composite PMI. Moreover, at 15:00 GMT, the ISM services PMI will come out and is forecasted to decline to 56.8 versus 57.7 before.

There are several Fed speakers today, including Kashkari, Bullard, Harker, Mester, and Evans.