New US president finally takes office

US dollar edged lower last week while US stocks were almost flat. No significant economic data came out on Monday in US and US stock exchanges were closed due the Martin Luther King holiday. US dollar index advanced a bit amid slump in British pound. UK’s Prime Minister Theresa May announced the "hard" Brexit which means UK will leave not only the European Union but also the single market and other European structures. Amid this, pound tumbled to the 32-year low (since May 1985). Later Theresa May said she would work to defend the free trade between UK and EU. After that, on Tuesday, pound sterling showed record daily surge since 1998 while US dollar index fell respectively. No significant economic news came out on Tuesday. US stock markets shrugged off all the pound fluctuations and edged lower early last week. The additional negative came from Donald Trump who said he was planning to renounce the medical insurance of Obamacare program and could launch a probe into good reason behind drug prices. As a result, Nasdaq biotech index lost 2%.

Negative December inflation data came out in US on Wednesday. Consumer prices increased 2.1% year on year to their highest since October 2012 which exceeded the Fed target level of 2%. Nevertheless, US dollar advanced partly due to the speech of Janet Yellen who hinted on future rate hikes. Additional positive was the record December manufacturing production growth in two years. Stock indices edged higher on Wednesday within the narrow flat trend which has been in evidence since mid-December 2016. The next day, on Thursday, the indices edged lower back. Investors were reluctant to open positions ahead of inauguration of Donald Trump being concerned with possible protests of Democrats. The US housing data came out positive. Moreover, weekly unemployment fell to the lowest since November 1973. At first, US dollar index surged on these positive data but then closed with small losses.

No significant economic data came out on Friday. The ceremony of Donald Trump’s inauguration took place. US assets traded little changed. US dollar index edged lower while stocks slightly advanced. Investors expect the details on Trump’s economic program and probable revision of state military contracts with major US companies. Preliminary forecasts are quite optimistic: total earnings of S&P 500 may rise 6.3% in Q4 2016 and 13.6% in Q1 2017.

Not much economic data are expected this week but they will be important for the markets. The new home sales, wholesale inventories and trade balance for December will come out on Thursday as well as Markit composite and services PMIs for January. The Q4 GDP, durable goods orders and consumer confidence index from the Michigan University will come out on Friday.