U.S Consumer Confidence and Oval Office Chatter Keep the USD in Focus

A jump in Treasury yields did the trick for the Dollar on Wednesday, today’s stats will need to be solid for the USD to see more green.
Bob Mason
USD in focus

Earlier in the Day:

It was another quiet day on the economic calendar, with no material stats released through the Asian session this morning. A U.S equity market rally, coming off the back of reports of particularly strong retail sales figures over the holiday season and reassurances from the U.S President that there will be no attempt to remove the FED Chair, provided direction through the morning.

At the time of writing, the Japanese Yen stood at ¥110.97 against the U.S Dollar, down 0.36% for the morning, the Yen managing to recover from heavier losses from earlier in the day as the U.S futures point to a red opening later today.

Things were not so rosy for the Aussie and Kiwi Dollar either, with the Aussie Dollar down 0.14% to $0.7056 and the Kiwi Dollar down 0.24% to $0.6716, November industrial profit numbers out of China delivering more bad news from the world’s 2nd largest economy, leading to a reversal of gains made earlier in the day.

The disappointing numbers out of China were not bad enough to throw the equity markets into a spin however, with the Nikkei up 3.74% at the time of writing to lead the way. The ASX200 was also on the move, up 1.63%, while the Hang Seng and CSI300 saw early gains slip away, the pair up by just 0.52% and by 0.55% respectively.

The Day Ahead:

For the EUR, the markets will receive the first set of stats of the week, with France’s job seeker’s total due out. We don’t expect the EUR to show too much reaction to the numbers, with the release of the ECB Economic Bulletin earlier in the morning likely to be of greater significance for the EUR.

With ECB President Draghi having already delivered a more cautious speech at the last ECB policy press conference, the bulletin will need to raise more concerns to materially influence the EUR through the day, some softening to be expected as the markets are reminded of the acknowledged slowdown.

On the positive side, reports of the U.S and China planning to resume trade talks in the New Year will provide some support.

At the time of writing, the EUR was up 0.25% to $1.1381, with the ECB Economic Bulletin and market risk sentiment to provide direction through the day.

For the Pound, it’s another quiet day on the data front, with no material stats scheduled for release through the day. The lack of stats and lack of Brexit chatter may become an issue for the Pound, with the 14th January parliamentary vote on the Brexit deal now less than 3-weeks away.

The latest director’s survey out of the UK showed that business confidence fell to its lowest level since the survey began back in July 2016. The IoD survey reported that 57% of company directors surveyed were pessimistic about the economy, with only 20% forecasting a pickup in economic activity.

At the time of writing, the Pound up 0.21% to $1.2659, some support coming in spite of a gloomy economic outlook, with the Dollar on the back foot early in the day.

Across the Pond, economic data scheduled for release includes December consumer confidence figures, November new home sales and the weekly jobless claims numbers.

Barring a material jump in the weekly initial jobless claims figures, we will expect focus to be on the consumer confidence and new home sales numbers later today.

Outside of the numbers, the U.S government shutdown and market reaction to the prospects of U.S – China trade talks resuming on 7th January will have some influence, as will any chatter from the Oval Office through the day.

At the time of writing, the Dollar Spot Index was down 0.22% to 96.837, with today’s stats and any Oval Office chatter to provide direction through the day.

For the Loonie, it’s another quiet day on the data front, leaving the Loonie in the hands of market risk sentiment, with direction in crude oil prices to be the key driver through the day, a more than 8% bounce in WTI prices on Wednesday having provided some much needed relief.

The Loonie was down 0.12% to C$1.3590 against the U.S Dollar at the time of writing.

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