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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Oil Extends Decline as Rising U.S. Production Weighs

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On Monday, oil prices prolonged declines, pulled down by indications of growing production in the United States that  would partially offset output cuts by the Organization of Petroleum Exporting Countries and other producers.

After President Donald Trump presented immigration curbs that generated criticism at home and abroad, uncertainty over the outlook for U.S policy also broadly influenced  the financial markets.

Oil trading was quiet with some Asian countries, including China, on holiday for the Lunar New Year. After the opening bell on Monday, the delivery of NYMEX crude for March declined 27 cents at at $52.90 a barrel.

Global benchmark Brent crude oil prices declined 25 cents at $55.26 a barrel at 1010 GMT, while U.S. crude futures fell 8 cents to $53.09.

The number of active U.S. oil rigs increased to the highest since November 2015 the previous week, according to Baker Hughes data, indicating  that drillers are taking advantage of oil prices above $50 a barrel.

The Organization of the Petroleum Exporting Countries and other producers, including Russia, agreed to reduce production by nearly 1.8 million barrels per day in the first half of 2017 to relieve a two-year supply overhang.

“We are in wait-and-see mode, I suspect at the moment. Oil has reached a fair value equilibrium level given the current supply and demand outlook,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.

“Until we get anything to really disrupt that, we may not see too much change,” he said, adding the market may draw some comfort from official OPEC figures for January production.

However,  U.S. oil output has been increasing, with the International Energy Agency forecasting total U.S. production growth of 320,000 barrels per day (bpd) in 2017 to an average of 12.8 million barrels per day bpd.

“The rise in U.S. output should not be unexpected,” ANZ bank said in a note.

“However, we expect the reductions being made by OPEC will far exceed any rise in the U.S. and quickly reduce the global inventory that has been built up over the past two years,” it added.

Hedge funds and money managers boosted bullish wagers on U.S.crude oil to the highest level since mid-2014, the Commodity FuturesTrading Commission (CFTC) data showed on Friday, as agreed output cuts by the world’s top producers began to eat into a global glut.

In addition, on Sunday, President Donald Trump justified  his move to ban entry of refugees and people from seven Muslim-majority nations and stated the United States would continue issuing visas for all countries in the next 90 days as he faced increasing criticism at home and abroad and new demonstrations in U.S. cities.

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Demand for Microsoft Cloud Services Soars

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On Thursday, Microsoft Corp published a 3.6% increase in fiscal second quarter profit,  supported by progress in its fast growing cloud computing business, however, it saw a small decline in margins in the unit that includes its flagship cloud platform Azure.

Shares of the world’s largest software company increased approximately 1.1%  in after-hours trading.

Since taking responsibility in 2014, Chief Executive Satya Nadella has directed the company in the direction of cloud services and mobile applications and far from its slowing traditional software business.

Gross margins for Microsoft’s so called “commercial cloud” business, that includes Azure and the types of its online Office 365 products sold to businesses, were  48%, stated by the head of Microsoft’s investor relations, Chris Suh.

Which was  down from last quarter’s 49%, however,  up from 46% a year before. The figure is observed carefully by investors as an indication of the actual gain made of Microsoft’s cloud products, which the company does not announce.

The Azure platform contests with cloud infrastructure offerings from market leader Amazon.com Inc, Alphabet Inc’s Google, IBM and Oracle Corp.

“We’re not at Amazon’s margin today,” said Suh. “Their infrastructure business is much larger. They have the benefit of scale. We track more like what Amazon was when they were closer to our size.”

Revenue from Microsoft’s ‘Intelligent Cloud’ business, which includes Azure, together with other data center software, increase 8.0% to $6.9 billion in the quarter. That beat analysts’ average estimate of $6.73 billion, according to research firm FactSet Street Account.

Microsoft’s estimates for next quarter were $6.45 billion to $6.65 billion, only slightly higher than FactSet’s $6.61 billion assessment.

In constant currency, Azure’s revenue increased 94%  year over year, a good clip, but still the lowest progress  rate since Microsoft started revealing the figure in 2015, and down from 121% the previous quarter.

Sales of Office 365 to businesses increased 49%, down from 54%in the prior quarter. As with Azure, Microsoft does not provide a complete dollar figure for Office 365 sales.

Sales in Microsoft’s personal computing business, which includes its Windows software  declined 5% to $11.8 billion, to some extent beating the rate at which personal computer sales dropped in the quarter.

Together with his push into cloud and mobile, Nadella also arranged Microsoft’s biggest acquisition, the $26.2 billion contract for LinkedIn, which closed the previous  month.

Microsoft stated, LinkedIn contributed $228 million of revenue in the quarter, but reported a net loss of $100 million, or 1 cent per share.

Microsoft produced 84 cents per share in the quarter, without LinkedIn and some other items. That beat Wall Street’s average estimate of 79 cents.  The company’s net income increased to $5.20 billion, or 66 cents per share, in the quarter ended Dec. 31, from $5.02 billion, or 62 cents per share, a year before, according to the reports.

Its changed revenue, excluding LinkedIn, was $25.838 billion, ahead of analysts’ average estimate of $25.298 billion.

In the past 12 months,  Microsoft’s shares had increased 23.2%, compared with the 20.7% surge in the broader S&P 500 index.

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Dollar Remains near 7-Week Lows vs. Other Majors

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On Thursday, the greenback struggled near seven-week lows  compared to the other major currencies, as worries over U.S. President Donald Trump’s protectionist strategies, including an executive order to build a U.S.-Mexican border wall weakened dollar.

Trump on Voting Investigation

The greenback was generally weaker in spite of U.S. shares gaining and the Dow Jones Industrial Average  closing atop the 20,000 spot for the first time The dollar index, which tracks the dollar against a basket of major currencies, previously down 0.2% at 99.839. It plunged to 99.835 on Wednesday, its lowest level since Dec. 8.

The greenback destabilized after U.S. President Donald Trump stated on Twitter that he would seek a “major investigation” into assumed voter fraud, concentrating on two states and illegal voters.

The call came in spite of Republican elected representatives in key states saying they have found no evidence of deceitful voting.

The National Association of Secretaries of State said on Tuesday,  it had confidence in the “systemic integrity of our election process” and was not aware of any evidence related to Trump’s statements.

Since Trump’s inauguration last Friday, the greenback has been under pressure and worries about the lack of  transparency on his economic policies and doubts that his protectionist trade stance could hit corporate incomes and act as a strain on growth.

Against the Majors

EUR/USD inched up 0.10% to 1.0742, not far from Tuesday’s six-week high of 1.0775.

In Asia, 4th quarter inflation in New Zealand increased 1.3% year-on-year and 0.4% quarter-on-quarter, both beyond expectations with the NZD/USD down 0.12% to 0.7284 after the data, although Japan reported the corporate services price index increased 0.4% in December as projected.

In Japan, data on Wednesday indicated that exports increased for the first time in 15 months in December.  USD/CHF inched down 0.14% to trade at 0.9994.

On Wednesday, the Australian Bureau of Statistics reported that the consumer price index increased  0.5% in the 4th quarter of 2016, disappointing prospects for an increase of 0.7%.

President  Trump wants to renegotiate the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

Temporarily, USD/CAD retreated 0.49% to trade at 1.3093, the lowest since January 18. After Trump tweets  “we will build the wall” the Mexican peso is increasing. It is up by 0.4% at 21.4400 per dollar as of 8:08 a.m. ET.

In pairs, USD/JPY increased 0.04% to 113.31, while GBP/USD gained  0.08% to 1.2644. AUD/USD traded at 0.7572, down 0.04%. The pound established support as investors expected the government’s bill to activate Article 50 and start the formal procedure of exiting the EU.

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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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