Forex news for North American trade on January 25, 2018:
- Trump announces deal to end government shutdown for three weeks
- December ISM non-manufacturing index revised higher
- EU could give UK "couple of extra weeks" beyond March 29 deadline to finalize Brexit deal
- Whip tells MPs that Brexit withdrawal deal could be re-opened
- Canada April-Nov budget deficit $2.13B vs $9.45B a year ago
- Belgian business confidence -1.5 vs -0.9 prior
- Trump adviser Roger Stone arrested on seven charges
Markets:
- Gold up $22to $1303
- WTI crude up 45-cents to $53.58
- US 10-year yields up 3 bps to 2.75%
- S&P 500 up 21 points to 2663
- NZD leads, USD lags on the day
The US government shutdown deal gave USD/JPY a brief lift to 109.90 from 109.60 but it eventually gave it all back and the pair is near the lows of the day at 109.48.
The bigger story on the day was heavy selling in the US dollar. I haven't seen a compelling explanation for the rip in the gold but here's the chatter:
- The shutdown deal is only 3 weeks and there's pessimism on a lasting deal
- Roger Stone's arrest brings the Mueller probe closer to the White House
- A WSJ report about the Fed keeping a bigger balance sheet is dovish
- The PBOC Friday announced an extra 250 billion yuan in lending availability
- Risk appetite boosting demand for commodities and commodity FX
- Flows into GBP from USD on better Brexit sentiment
What's notable is that the US dollar is finishing at the lows of the day and (on a number of fronts) the lows of the week. Cable gained nearly 150 pips on the day to 1.3212 as it took out the October high. The Oct high of 1.3258 is the next one to watch.
NZD/USD edged above the January high late in the day to a one-month high in an impressive 1.2% gain.
USD/CAD was particularly hard hit in part due to oil settlement flows. The pair had made solid gains earlier in the week but it was all wiped out in a 130 pip drop lower. Oil was a minor help but it was mostly about the weak US dollar.
EUR/USD shook off a soft IFO report in a surge to an 11-day high of 1.1414. Yeterday's drop to support at 1.1280 was clearly rejected in a total reversal that bodes well for the euro.
Gold also ripped higher and finished with an extra flourish in a rise to $1303, bringing it above the $1275-1300 consolidation zone where it's been hanging out for the past two weeks. With Chinese new year coming, the buyers finally arrived.
