Canadian Inch Up During Uncertainty Over Trump Travel Ban

On Monday, the Canadian dollar inched higher against its U.S. counterpart, however, the gains were plugged as weakness in oil prices and doubt over a travel ban executed by U.S. President Donald Trump measured.

USD/CAD declined 0.18% at 1.3094, not far from intra-day lows of 1.3118, 1:51 AM (EST).

After Trump signed an executive order on Friday, the greenback stayed on the back foot that restricted immigration from seven predominantly Muslim countries, emphasizing concerns over the destabilizing effect of the new administration’s protectionist policies.

The directive prompted legal challenges, international criticism, extensive protests and confusion over its implementation at airports.

On Friday, sentiment on the dollar was also hit by data, presenting a sharp decline in U.S. fourth quarter progresses, driven speculation that the Fed Reserve will avoid hiking interest rates too fast.

Fed will hold its next policy meeting on Wednesday,  isn’t expected to increase interest rates, however, investors are eager  to hear how it views the economy and the future trail of interest rates.

Data on Monday indicated that U.S. consumer spending increased solidly in December, rising 0.5% after a 0.2% surge  in November.

Personal income increased 0.3%  the previous  month after edging up 0.1% in November.

Another  report  presented that U.S. pending home sales increased by 1.6% in December, ahead of predictions for a 1.1% increase.

In the meantime, prices of oil, a major Canadian export, stayed sluggish after a report presenting an increase in the number of active U.S. oil rigs the previous week,  added to worries about glut at a time when major producers are reducing production in a bid to support the market.

Statistics from Baker Hughes presented U.S. drillers added 15 oil rigs the prior week, taking the total to its highest since November 2015.

On Additional News

On Tuesday, the yen increase against the dollar as the Bank of Japan left its monetary policy and raised its growth predictions.

The greenback was off  0.11% at 113.65 yen at 02:15 ET.  The dollar index was off 0.03% at 100.39.

The Bank of Japan kept its excess reserve rate at minus -0.1%; 10-year bond yield goal at close to zero.

The greenback weakened as President Trump moved to sack the acting Attorney General, as she failed to endorse his travel ban.

The euro and sterling  were steady. The Bank of England is also anticipated to leave policy on hold on Thursday.

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Dollar Drops Against Yen on Trade Data

 

shutterstock_262120577On Wednesday in Asia, the greenback inched weaker compared to the yen as Japan trade indicated a surprise increased on exports and investors noted the most latest  tweet by President Donald Trump indicated he would sign an executive order on Wednesday to build a wall on the border with Mexico.

USD/JPY moved hands at 113.59, down 0.18%, while GBP/USD increase 0.05% to 1.2528 after a court decision on Tuesday on the measures the government may take to exit from the European Union trade bloc.  USD/CHF increased 0.05% to 1.0013, and USD/CAD drop 0.18% to 1.3135.

In the meantime, the dollar stayed mildly supported on Wednesday morning, in spite of continuing worries over new U.S. President Donald Trump’s protectionist policies.

The U.S. dollar index, which gauges the greenback’s strong point against a trade-weighted basket of six major currencies, increased 0.11% at 100.37, after hitting a six-week low of 99.89 on Tuesday.

After Trump tweeted that he will take executive action to build a wall along the U.S.-Mexico border, USD/MXN changed.  Trump repetitively demanded Mexico would be forced to pay for the construction.

Prior to the  tweet, the U.S. greenback was fetching about 21.4850 pesos and after it was sent, it was gathering as much as 21.56 pesos.That’s still lower than the record high levels over 22 pesos touched earlier this month.

On Tuesday, the greenback staged a rebound in the U.S. with sentiment turning more positive on economic development outlooks that should be prompted by tax reductions and higher infrastructure spending under the new government.

While the Canadian inched  higher against its U.S. counterpart on Tuesday as worries eased that Canada could be hit by any changes to the NAFTA trade deal  and oil prices firmed.

USD/CAD hit lows of 1.3209 and previously  at 1.3224, down 0.11% from Monday’s close.

The pound declines to the day’s lows on Tuesday as a presiding that British Prime Minister Theresa May must pursue parliamentary approval before triggering the procedure to leave the European Union looked questionable to hamper the government’s ideas.

On Additional News

On January 25, the Australian and New Zealand dollars change lower against their U.S. counterpart, following weak inflation data from Australia and as demand for the dollar stayed widely supported.

AUD/USD dropped 0.66% to 0.7532, the lowest since January 20.

Earlier on  Wednesday, the Australian Bureau of Statistics reported that the consumer price index increases 0.5% in the 4th quarter of 2016, disappointing anticipations for an increase of 0.7 percent.

Year-on-year, consumer prices increased 1.5% in the last quarter, lower than the expected 1.6% increased.

NZD/ USD drops 0.29% to trade at 0.7228, off the prior session’s two-and-a-half month peak of 0.7279.

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January 16 to 20 Forex Weekly Outlook

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On Friday, the U.S. greenback declined against the other major currencies and the greenback index posted its biggest weekly drop since late October as optimism chilled over President-elect Donald Trump’s economic policy proposals

The U.S. dollar index, which gauges the greenback’s strong point against a trade-weighted basket of six major currencies, declined 0.29% to 101.17 on late Friday.

During the week, the index shed 1.0%, marking its poorest weekly performance since late October.

On earlier Friday, The index had increased after upbeat U.S. retail sales statistics boosted the economic outlook.

It was reported that in December,  the Commerce Department reported retail sales increased 0.6%, while November’s sales were revised up to indicate a 0.2% increase.

However,  the greenback retraced gains during doubts over the incoming Trump administration’s plans for fiscal stimulus, deregulation and tax reductions.

On Wednesday, the greenback decline suddenly  and reach five week low against the euro, yen and Swiss franc on Thursday as Trump frustrated traders who had been expecting he would address economic and fiscal policies in his first formal news conference as U.S. president-elect.

Earlier this month, the dollar index rallied to 14-year high on expectations that Trump’s policies would speed up growth and inflation and prompt the Fed Reserve to increase  interest rates more rapidly.

On January 20, 2017, Trump will officially take office.

On late Friday, USD/JPY declined  0.14% in 114.53 and the pair dropped 2.23% for the week, its poorest week since late July.

The euro also pressed higher, with EUR/USD at 1.0644 in late trade, after touching an intra-day low of 1.0596 following the U.S. retail sales report. For the week, the euro increased 1.08% compared to the greenback.

Sterling inched higher; with GBP/USD  easing up 0.12% to 1.2174 but stayed under pressure before a speech on the U.K.’s Brexit plans that Prime Minister Theresa May will make on Tuesday.

In the week onward, financial markets will continue to concentrate on U.S. President-elect Trump ahead of his inauguration on January 20, Friday.

Investors will be looking forward to Tuesday’s strongly expected Brexit speech and Thursday’ policy statement by the European Central bank.

China’s data on 4th quarter growth will also be closely observed.

On Additional News

On January 16, Martin Luther King Day,  U.S. financial markets will be closed.  Bank of England Governor Mark Carney is scheduled  to speak at an event in London.

On Tuesday, January 17, New Zealand is to announce private sector statistic on business confidence.

New York Fed Reserve President William Dudley is to talk at an event in New York and the U.S. is also to announce the Empire State manufacturing index.

The U.K. is to publish data on inflation. U.K. Prime Minister Theresa May is scheduled to speak regarding starting proceedings for Britain’s exit from the EU.

The ZEW Institute is to report on German economic sentiment.

On  January 18, the U.K. is to post its monthly jobs report.

The euro zone is to publish revised data on inflation.

The U.S. is to release figures on inflation and industrial production. Later in the day, Fed Chair Janet Yellen is to speak at an occasion in San Francisco.

The Bank of Canada is to release  its current monetary policy decision and hold a press conference to talk about the economic outlook.

Thursday, January 19, Australia is to release  its monthly employment report.

The European Central Bank (ECB) is to publish its current monetary policy decision. The announcement is to be followed by a press conference with President Mario Draghi.

Canada is to report on manufacturing, sales and foreign securities purchases.

Fed Reserve Chair Janet Yellen is to speak at an event at Stanford.

Friday, January 20, China is to publish statistics on 4th quarter progress along with figures on industrial production.

The U.K. is to publish statistic on retail sales. Canada is to round up the week with statistic on retail sales.

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Dollar Declines After Trump Offers no Details on Economic Policies

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On Thursday, the greenback slipped, moving back to one-month lows compared to the perceived safe-haven yen, after President-elect Donald Trump’s highly-expected news conference failed to offer information on his promises to increase fiscal spending and reduce taxes.

Donald Trump, who takes office on Jan. 20, did not elaborate on his intended growth policies, and instead took aim at goals that included pharmaceutical companies and U.S. intelligence agencies.

On Wednesday, the dollar declined as low as 114.245 yen, its deepest base point since Nov. 9, and last stood at 114.52, down 0.8% on the day.

“There’s ‘Good Trump’ and ‘Bad Trump’ for the markets. Will ‘Good Trump’ return before the inauguration?” said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank in Tokyo.

“We need to see if the overnight dollar low holds in today’s Tokyo session,” she added.

The dollar index, which tracks the U.S. currency against a basket of six major counterparts, slipped 0.4 percent to 101.42 (DXY). It had risen to a one-week high on Wednesday, ahead of Trump’s news conference.

The dollar index had increased to its highest levels since 2002 as investors bet Trump’s promises of fiscal expansion and tax reductions would increase progress and inflation, motivating a faster pace of interest rate hikes from the Fed  Reserve and increasing the yield on the dollar.

“Although some investors who missed out on the dollar’s post-election rally were still looking to buy on dips, others were seeking to pare their long dollar positions in case the coming reality of Trump’s administration fail to live up to expectations,” Tokyo market participants said.

The euro added 0.2% to $1.0605, after slipping to a 14-year low of $1.0340 <eur=>the previous week.

But compared to the yen, the euro skidded 0.6% to 121.41 yen (EURJPY=) closing in on its overnight low of 121.275, which was its lowest since Dec. 9.

Lower U.S. Treasury yields also weakened the greenback,  as Trump’s remarks increased the safe-haven appeal of U.S. government debt.

The benchmark yield decline to a one-month lows, as strong demand at an auction also press up prices.

In Asian trading, the yield on 10-year U.S. notes (US10YT=RR) stood at 2.332%, down from Wednesday’s U.S. close of 2.370%.

Bucking the weak greenback trend, the Mexican peso hit a fresh record low against the dollar of 22.0440 pesos on Wednesday, after Trump notified U.S. auto companies would face a high tax for goods made in that country and exported to America.

“The fall is very natural after what Trump has been saying about the Mexican relationship, but I also think that maybe the selling is almost over as he is saying nothing new,” said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

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Dollar Inch Up, Markets Await Trump News Conference

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On Wednesday, the greenback inched higher  against a basket of major currencies in advance of a news conference by U.S. President-elect Donald Trump in which he is anticipated to spell out more regarding his plans for the economy.

The  dollar index increase 0.2% to 102.18 (DXY).

The greenback rally generated by Trump’s surprise victory in the November election has shown indications of fading, as the index has gone from a 14-year high of 103.82 scaled on Jan. 3 to a low of 101.30 over the previous  week.

The euro declined 0.1% at $1.0545 after brushing a 10-day peak of $1.0628 overnight.

The greenback firmed 0.3% to 116.100 yen. It had suffered two days of losses against the safe-haven Japanese currency.

“Currency pairs, settled into a narrow range ahead of Trump’s news conference – his first since the election – which is due to start at around 11:00 EST (1600 GMT) neared, according to the report.

“I did not expect the Tokyo session to be this quiet,” said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo. “It reflects the level of caution prevailing in the market before Trump’s appearance.”

“During the past two months,anticipations that the Trump administration would enact economic stimulus gauges backed by massive fiscal spending have taken Wall Street to record highs, U.S. debt yields to levels unseen since 2014 and the dollar index to the 14-year high, according to the reports.

“Against that backdrop, financial markets are keen to see how Trump will follow through on campaign pledges.”

“The dollar is set to resume the Trump rally if he provides specifics of stimulus measures, notably those related to tax cuts, which appear achievable,” stated by an strategist.

“On the other hand, the market also focuses on potential risk factors, like Trump taking a tough stance against China. That could prompt the dollar to fall against the yen.”

Somewhere else in the markets, sterling plunged 0.1% to $1.2168 to inch back towards a two-month low of $1.2107 set overnight. This week, uncertainties about the terms of Britain’s exit from the European Union have kept the currency under heavy pressure.

After popping up to $0.7385 overnight, the Australian dollar was flat at $0.7372, its highest since mid-December. This week, the U.S. dollar stall and increase in iron ore and coal prices have strengthened the  Aussie this week.

After touching a four-week peak of $0.7048 on Tuesday, the New Zealand dollar held steady at $0.6987.

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