Forex news for New York trading on January 26, 2016:
- December 2016 US new home sales 0.536m vs 0.588m exp
- January 2017 US Markit services PMI flash 55.1 vs 54.4 exp
- US December advance goods trade deficit $65.0 vs $65.3B expected
- Initial jobless claims 259K vs 247K expected
- December 2016 US Chicago Fed national activity index 0.14 vs -0.27 prior
- December 2016 US advance wholesale inventories 1.0% vs 0.1% exp m/m
- US dollar briefly pops on talk of repealing Dodd-Frank
- White House: Plan is to implement a 20% border tax on Mexican imports
- IMF out with its latest prescriptions for the eurozone economy
- ECB's Weidmann: Inflation will broadly meet ECB mandate by 2019
- Trump: We are going to have strong controls over FX manipulation
- Canada continues to show 'strong' evidence of housing-market problems - CMHC
- Pena-Nieto cancels meeting with Trump
- Six top State Department officials quit
- Kansas City Fed Manufacturing activity index (Jan) 9 vs. est. of 8
- December 2016 US leading index 0.5% vs 0.5% exp
- ECB's Knot: Improved economy reduces the need for more stimulus
Markets:
- S&P 500 down 2 points to 2296
- WTI crude up $1.02 to $53.77
- US 10-year yields down 1.1 bps to 2.50%
- Gold down $12 to $1189
- USD leads, JPY lags
The market had some data to chew on after a light week but the numbers weren't a big factor. The trade balance was close to expectations and new home sales were soft but the market saw it as a blip.
The dollar was stronger before New York arrived and then it had a bit of a hiccup before strengthening again late. You could say the move was catch up after two days of lagging despite higher stocks and yields. On the intramarket front today bonds and equities weren't a big factor.
The largest move was in USD/JPY as it climbed 140 pips to a four-day high. Most of the gain was in Europe but the pair ran stops above 114.50 to a daily high of 114.86 and finished about 20 pips lower.
The euro chart is worth a closer look as it breaks lower after a couple days of treading water. Some comments from Weidmann did the round and they were a touch dovish by German standards.
Cable backed off after a nice run up over the past two weeks from 1.20. It started to sag shortly after Europe ramped up and hit a low of 1.2557 as US traders arrived. That there was no further selling is more evidence that specs are clearing out of a crowded short.
USD/CAD finished the day 40 pips higher despite a 2% jump in oil. The pair found some support ahead of 1.3050 and finished just above 1.31.
If you take a step back, it was a good day for the US dollar but it remains vulnerable on a number of fronts, especially CAD, EUR and GBP.
