After an impressive opening week to the year, US futures are pointing to a flat open on Wall Street on Monday, with investors eyeing a few key data points and the start of fourth quarter earnings season.
Heading into another earnings season, there is a strong sense of optimism in the markets, with the Dow having blown past 25,000 with relative ease before ending the week with a record close. While we’re currently looking at a flat start, the US may take some direction from Asia and Europe as we approach the open with both regions having posted/posting moderate gains at the start of the week.
The US dollar is taking another stab higher this morning after its false start last week but it’s clearly struggling for any upward momentum. Sentiment towards the greenback has softened considerably despite the passing of tax reform in the US, something many thought may have been a positive for the currency. Given the downside we’ve seen in the dollar over the last month, we could see a small correction although as of yet, there doesn’t appear too much appetite for upside.
Perhaps today’s Federal Reserve speakers will provide the catalyst for a move higher in the dollar, with John Williams, Raphael Rostic and Eric Rosengren all making appearances. Williams and Rostic will both be voters on the FOMC this year and so their views will be very closely monitored and could have an impact, although with Jerome Powell set to succeed Janet Yellen as Chair next month and a number of roles still to be filled, there remains an element of uncertainty when it comes to Fed policy going forward.
While there is a number of key data releases that will be closely monitored this week, the bulk of these will come later on, most notably US retail sales and CPI inflation on Friday. Friday will also mark the start of earnings season which will be a key focus for investors over the coming weeks now that tax reform is over the line.
