Dollar remains the weakest major currency over the week despite some positive comments from Fed officials. Fed Governor, Lael Brainard indicated that material increase in fiscal stimulus measures would lead to acceleration in rate hikes. Speaking for the Brookings Institution, Brainard suggested that "if fiscal policy changes lead to a more rapid elimination of slack, policy adjustment would, all else being equal, likely be more rapid than otherwise". She added that "based on recent spending indicators, we might expect progress to continue to be gradual and steady". Meanwhile, speaking for the National Retail Federation, New York Fed president William Dudley noted that the "risk that the Fed will snuff out the expansion anytime soon seems quite low because inflation is simply not a problem".
However, the greenback was clearly weighed down by president elect Donald Trump's warning on its strength. He said that the US might need to "get the dollar down" if a change in tax policy drives it higher, adding that "having a strong dollar has certain advantages, but it has a lot of disadvantages". Regarding the trade relations with China, Trump noted that "our companies can't compete with [China] now because our currency is too strong. And it's killing us". Overall, Trump will have his inauguration date later on Friday and he might outline his initial priorities in office. There are prospects of more volatility in the greenback.
Sterling is now the strongest major currency after lifted by prime minister Theresa May's speech on Brexit. May emphasized that the goal of her 12-point plan for Brexit is "a new, positive and constructive partnership between Britain and the European Union". Concerning the closely watched trade relations, she noted, "Brexit must mean control of the number of people who come to Britain from Europe. And that is what we will deliver... what I am proposing cannot mean membership of the single market". While providing details on neither the trade terms nor immigration control, May indicated that UK would seek a free-trade deal with the EU outside the single market, a new customs relationship that would allow Britain to negotiate trade deals around the world, but have "frictionless" cross-border trade, a "phased implementation process" at the end of the two-year period of negotiations, rather than a lengthy transitional deal, no more unrestricted immigration from the EU, and complete withdrawal from the European Court of Justice. Importantly, May confirmed that "the government will put the final deal... to a vote in both Houses of Parliament before it comes into force".
Bank of Canada will announce rate decision today. BoC is widely expected to keep benchmark interest rate unchanged at 0.50% and will likely be a non-event. Fed will also release the Beige Book economic report. On the data front, Australia Westpac consumer confidence rose 0.1% in January. German CPI was finalized at 0.7% mom, 1.7% yoy in December. UK will release job data today while Eurozone will release CPI final. US will release CPI, industrial production and NAHB housing index.