The dollar is down slightly against the Euro at the start of the new trading week, but is little changed against both the Japanese Yen and the pound sterling. Action is expected to be lighter this week, due to the upcoming holiday. U.S. markets will close early on Tuesday and will be closed all day Wednesday for Christmas.
While the Commerce Department released a report on Monday showing that U.S. personal income rose by less than expected in the month of November, the report still showed that personal spending increased in line with estimates.
The report said personal income crept up by 0.2 percent in November after edging down by 0.1 percent in October. Economists had been expecting income to increase by about 0.5 percent.
At the same time, the Commerce Department said personal spending rose by 0.5 percent in November following a 0.4 percent increase in October. The increase in spending matched the expectations of economists.
Consumer sentiment in the U.S. showed a notable improvement in the month of December, according to a report released by Thomson Reuters and the University of Michigan on Friday, with the consumer sentiment index unrevised from the preliminary estimate.
The report showed that the final reading on the consumer sentiment index for December came in at 82.5, up from the final November reading of 75.1. Economists had expected the index to be upwardly revised to a reading of 83.5.
Investors will also be watching for the release of the U.S. durable goods orders for November on Tuesday, as well as U.S. new home sales.
The International Monetary Fund raised its outlook for the U.S. economy, citing falling unemployment, some signs of compromise in Congress and the Federal Reserve’s plan to start tapering its $85 billion monthly bond-buying program.
The Federal Reserve will not hike its benchmark interest rate from near zero until 2015, according to Jeffrey Lacker, president of the Federal Reserve Bank of Richmond. “I put early 2015 when I think the fund rates will lift off, but that’s something that could change a lot one way or the other,” Lacker said on CNBC’s “Squawk Box.”
The dollar hovered around the $1.3680 level against the Euro early Monday, but has since fallen to over a 2-session low of $1.3715.
Germany’s import prices declined at a slower rate in November from last year, data released by the Federal Statistical Office showed on Monday. The import price index decreased 2.9 percent year-on-year, following a 3 percent fall in October. Economists had expected the index to drop 3.1 percent.
Exports prices declined 1.1 percent year-on-year in November, after falling 1 percent in each of the previous three months.
Italy’s consumer confidence weakened in December, in contrast to expectations for a modest improvement, data released by the statistical office ISTAT showed on Monday. The consumer confidence index eased to 96.2 from 98.2 in November, which was slightly revised from the initial score of 98.3. Economists were looking for a higher reading of 98.9.
The Bank of England is watching the housing market and will use all possible tools at its disposal to curb a property bubble, Deputy Governor Andrew Bailey said in an interview published on Saturday.
“We are watching the housing market very carefully,” Bailey told the Daily Telegraph. “We’ve laid out the tools that we can use. That is hugely important – that we have set out our desire to see robust mortgage underwriting standards and that will be part of the approach,” he was quoted as saying.
“We know sadly from history mortgage underwriting standards are very cyclical,” Bailey said. He indicated that there will be a clampdown on house purchases if there is any evidence that increasing prices are spiraling out of control.
The greenback began Monday’s session around the $1.6325 level against the pound sterling, but has since dipped to around $1.6350.
Japan’s government forecasts the economy to grow at a slower pace in the next fiscal year ending March 2015, due to dampening impact from the planned sales tax hike in April next year. The real gross domestic product is expected to rise 1.4 percent in fiscal 2014, after an estimated 2.6 percent growth in fiscal 2013, the government said in its annual budget review.
The buck dipped to a low of Y103.763 against the Japanese Yen on Monday, but has since rebounded to around Y104.075, nearly unchanged for the session.