US dollar surges to start the year; US economic calendar light

The US dollar is sizzling today even as Treasury yields fall.

It’s a reminder that intermarket correlations don’t matter on Day 1 as flow-driven trade dominates. The rally in the dollar speaks only to demand for liquidity and the world’s reserve currency — I wouldn’t take it as any kind of verdict on the US economy.

In terms of news, two stories are at the top of my radar:

  1. The undershoot in German inflation data, indicating that central banks may not need to be so hawkish
  2. Reports on rising Chinese subway use

I certainly don’t see any signs of a hangover in trading today but it will continue to be choppy as flow ramps up. S&P 500 futures are up 14 points.

On the economic calendar, we get the S&P Global PMIs for Canada (9:30 am ET), the US (final edition, 9:45 am ET) and US construction spending (10 am ET). There are no scheduled Fed speakers.

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