Following Thursday and Fridays data heavy sessions, the inactivity in the greenback Monday finally seemed deserved. After the only scheduled, third-tier economic indicator was unexpectedly pushed back, market movement was left to external factors.
In the benchmark EURUSD, the dollar found a modest bid in London hours for a 60-point run to 1.2920 before loosing steam and retracing much of the move. For the inflection of the euro move, USDCHF made its move off of 1.2470 support, only to top out in a spike high around 1.2530 and fully retrace the move. Even the pound has be inordinately quiet with only a short lived spike to 1.9790 accounting for most of the GBPUSDs 75-point range. Finally, a new four-year high in USDJPY was slowly forged as ever attractive carry drew in bids to 121.80.
The dollar was left to drift through Mondays session as a general quiet surrounding the currency mixed with a vacant calendar. Since last week, the correlation between fundamentals and price action has diverged. Last week was spotted with key data and more than a few surprises. Concentrating on the key data that has no doubt roused the ranks at the Federal Reserved, as it had the economists in the market, a general theme has appeared. The trend in these closely released indicators perhaps offered the evidence for the turn in the economy. With additional confirmation of a turn in the housing market, a solid rise in industrial production and a boost in pivotal consumer confidence, the argument for strong GDP numbers going forward increases. However, the market has not responded this way. Instead, caution has dominated the market, as traders are determined not to be caught up in economic numbers until the issue of a potential rate cut sometime this year is cleared up.
Initially, Decembers Leading Economic Indicator was scheduled for release for this morning, but was instead pushed back to tomorrow with the reporting body citing a technical error as the reason. Despite this, tomorrows reaction to this release will likely be as staid as it would have been if it had been released this morning. Since many of the components for this gauge are known before hand, or can otherwise be surmised from related sources, the indicator is usually met with little fanfare. For the week ahead, expectations for dollar-side momentum are rather low, barring any unforeseen geopolitical event. The first signs of life will likely come on Wednesday when the World Economic Forum convenes in Switzerland. Though policy officials are not usually in attendance, the eclectic mix of business leaders, politicians and academics can fuel innovative ideas that are picked up by people that have more pull in the financial markets. Also scheduled for that day, existing home sales will begin to clear the smoke, so to speak, on whether the improvement in recent housing data has already marked the low or if there is yet a ways to go.
In equities markets, earnings numbers were officially weighing on the market. From the 17:50 GMT, the benchmark indices were led by a 1.01 percent plunge in the NASDAQ Composite to 2,426.52. Elsewhere, the Dow followed with a 0.85 percent contraction to 12,459.06 while the S&P slipped 0.65 percent to 1,421.27. Upon reading the headlines, the biggest story for the day was Pfizer Inc.s earnings report. Forth quarter earnings slipped and so did sentiment, even though the numbers were stronger than expected on an adjusted basis and the report of layoffs and possible plant sales. Pfizer shares lost $0.33, or 1.2 percent, to $26.89.
Treasuries, like currencies, were experiencing constrained price action with the lack of a fundamental push. Ten-year notes were trading 5/32nds higher at 98-31 while yields slipped 2 basis points to 4.755 by 17:50 GMT. Longer-termed bonds bounced 8/32nds to 94-21 as its own yield rose to 4.844.
