Americas Roundup: Dollar Declines Against Euro After Trump’s Comments Shake Dollar, Oil Higher As Opec Delivers on Output

Market Roundup

•    US labor costs rise modestly in Q4, 0.5% v 0.6% forecast, 0.6% previous, Benefits 0.4% v 0.7% previous.

•    Canadian Nov GDP grows 0.4% v 0.4% forecast, -0.2% previous.

•    US consumer confidence 111.8 v 113 forecast, 113.3 previous.

•    US Chicago PMI 50.3 v 55 forecast, 54.6 previous.

•    US Nov home prices increase faster than expected; Case-Shiller 20MM SA 0.9% v 0.7% forecast, 0.7% previous.

•    Trump Trade advisor Navarro comments on under-valued euro knock dollar to 2017 lows.

•    Trump protectionism will hurt Germany badly-BDI industry body.

•    OPEC achieves 82% of pledged oil output cut in January -Reuters survey.

•    Trump pushes drugmakers for lower prices, more US production.

Looking Ahead – Economic Data (GMT)

•    00:30 Japan Nikkei Mfg PMI Jan 52.8-previous

•    01:00 China NBS Non-Mfg PMI* Jan 54.50- previous

•    01:00 China NBS Manufacturing PMI* Jan forecast 51.2, 51.40- previous

Looking Ahead – Events, Other Releases (GMT)

•    No Significant Events

Currency Summaries

EUR/USD is likely to find support at 1.0715 levels and currently trading at 1.0783 levels. The pair has made session high at 1.0809 and hit lows at 1.0747 levels. Euro rose against the dollar on Tuesday as dollar declined after U.S. President Donald Trump commented on currency devaluation by other countries and his trade adviser remarked on the euro. In comments targeted to the pharmaceutical industry, Trump said currency devaluation by other countries had increased drug makers outsourcing their production and called on the companies to make more of their products in the United States. The U.S. Federal Reserve is expected to keep interest rates unchanged when it concludes its two-day meeting on Wednesday, in its first policy decision since Trump took office, as the central bank awaits greater clarity on his economic policies. The Fed is widely expected to keep the federal funds rate unchanged at a range of 0.50 percent to 0.75 percent this week, investors will be watching for any changes in the Fed’s assessment of economic conditions. The euro gained 1 percent against the dollar to $1.0801, its highest since Dec. 8.

GBP/USD is supported in the range of 1.2463 levels and currently trading at 1.2566 levels. It reached session high at 1.2594 and dropped to session low at 1.2474 levels. Sterling surged against dollar on Tuesday as the dollar was hit by U.S. President Donald Trump’s comments on currency devaluation by other countries. That dragged the dollar index, which tracks the greenback against six rival currencies, to its lowest since Dec. 8. The index is down about 2.6 percent for the month, its worst January since 1987. The pound sank as low as $1.2412 in the half-hour after the consumer data only to roar back past $1.2575 when U.S. President Donald Trump and his top trade adviser sent the dollar tumbling with comments about other countries’ devaluations of their currencies. In addition to Trump’s policies and remarks, the near-term focus for investors is the U.S. Federal Reserve’s two-day policy meeting that starts later on Tuesday. 

USD/CAD is supported at 1.2967 levels and is trading at 1.3020 levels. It has made session high at 1.3049 and lows at 1.2968 levels. The Canadian dollar strengthened to a two-week high against its U.S. counterpart on Tuesday as oil prices rose and domestic data that showed the economy expanded more than expected in November. The Canadian economy grew 0.4 percent in November from October, pushed up in part by a rebound in manufacturing, Statistics Canada data indicated. The U.S. dollar was on course for its worst start to a year in more than a decade after a trade adviser to U.S. President Donald Trump added to signs the new administration may be trying to talk its currency down. U.S. crude prices were up 1.18 percent at $53.25 a barrel after news that OPEC oil production has fallen by more than 1 million bpd this month, pointing to a strong start by the exporter group in implementing its first supply cut deal in eight years. The Canadian dollar was trading at C$1.3036 to the greenback, or 76.71 U.S. cents, stronger than Monday’s close of C$1.3120, or 76.22 U.S. cents.

AUD/USD is supported around 0.7500 levels and currently trading at 0.7580 levels. It hit session high at 0.7605 and made session lows at 0.73561 levels. The Australian dollar strengthened against US dollar on Tuesday as the greenback dipped after U.S. President Donald Trump added uncertainty to the market following stringent curbs on travel to the United States from seven Muslim-majority countries. Comments from Trump’s top trade adviser, Peter Navarro, that Germany was using a “grossly undervalued” euro to gain advantage over the United States knocked the dollar in early North American trading. In addition to Trump’s policies and remarks, the near-term focus for investors is the U.S. Federal Reserve’s two-day policy meeting that starts later on Tuesday. The gains have come on the back of a sagging greenback, with investors growing increasingly leery about U.S. President Donald Trump’s economic and social agenda. The Australian dollar rose 0.2 percent to $0.7589, having been trapped in a tight 75-76 U.S. cent band over the last 10 sessions.

Equities Recap

European shares ended January marginally lower after falling to a one-week low on Tuesday, as investors turned more realistic about U.S. President Donald Trump’s policies, even though solid economic data bolstered prospects for the region’s equities.

UK’s benchmark FTSE 100 closed up by 1.3 percent, the pan-European FTSEurofirst 300 provisionally closes down by 0.51 percent, Germany’s Dax ended up by 1 percent, France’s CAC finished the day up by 1 percent.

The S&P 500 fell on Tuesday for a fourth consecutive session, weighed by sectors sensitive to economic growth amid disappointing earnings and lingering concern over the priorities of the Trump administration.

Dow Jones closed down by 0.55 percent, S&P 500 down by 0.10 percent, Nasdaq finished flat.

Treasuries Recap

U.S. Treasury prices gained on Tuesday after President Donald Trump expressed concern about the value of the dollar, sending it lower and raising demand for safe-haven U.S. bonds.

Benchmark 10-year notes gained 11/32 in price to yield 2.44 percent, down from 2.48 percent late on Monday and the lowest level since Jan. 24.

Commodities Recap

Gold jumped to a one-week high on Tuesday as unnerved investors bought bullion after the dollar was hit by U.S. President Donald Trump’s comments on currency devaluation by other countries.
Spot gold climbed 1.4 percent to $1,211.15 an ounce by 3:30 p.m. EST (2030 GMT) after tapping its highest since Jan. 24 at $1,215.37. It was on track to close January up 5.2 percent, its strongest month since Juneau’s. gold futures settled up 1.3 percent at $1,208.60.

Oil prices rose on Tuesday on a weak U.S. dollar and news that the world’s top producers cut production this month more than forecasters had expected.

Brent crude oil for March settled up 47 cents a barrel at $55.70. Brent for April delivery was up as much as 2 percent at the session high. U.S. light crude closed the session up 18 cents at $52.81.

The material has been provided by InstaForex Company –