Forex news for New York trading on January 20, 2017:
- Draghi: The ECB looked through the surge in inflation as we saw it as energy based
- ECB hasn't discussed reducing stimulus
- December ECB decisions have succeeded
- We haven't discussed what will be cut from QE in April - Draghi
- Philly Fed business outlook +23.6 vs +15.3 prior
- Canada November manufacturing +1.5% sales vs +1.0% expected
- US Housing starts for December 1226K vs 1188K estimate
- US initial jobless claims 234k vs 254k exp
- RBNZ says Wheeler speech on Jan 26 won't be published, doesn't contain mon pol
- Mnuchin says he would be open to naming China FX manipulator 'if they do it'
- George Soros: Trump is a con man and would-be dictator
- US sells 10-year TIPS at at 0.436% vs 0.462% WI
- The Atlanta Fed GDPNow unchanged at 2.8%
- Weekly oil inventories +2347K vs -1000K expected
- BOJ's Kuroda: US tax cuts and infrastructure investments will boost US growth
- Schaeuble trusts that the ECB will do the right thing
- OPEC's Barkindo: The top goal for the OPEC deal is to accelerate a drawdown in oil stocks
- SNB's Jordan: Rates will stay low in Europe for some time
- Gold down $2 to $1205
- WTI crude up 30-cents to $51.38
- S&P 500 down 9 points to 2263
- US 10-year yields up 3.5bps to 2.46%
- NZD leads, CAD lags
There were a few chapters in a back-and-forth trading day that wraps up with the US dollar in the middle of the pack. It was near the top until the final few hours of trading when it began to slide.
The early focus was on the euro and Draghi squared off with the German faction that's beginning to fret about inflation. He repeatedly said inflation a temporary energy bump and that underlying factors are still subdued. That helped to pull the euro down to 1.0589 from 1.0660.
However in the latter half of the day the euro clawed all the way back. There was no headline driving USD sales but there is a sense that longs might want to square up ahead of Trump's inauguration on Friday night.
Stephen Mnuchin put on a solid performance and didn't sound overly partisan or determined to pick fights in Washington. He said it was important that the US dollar was strong in the long term and that he wouldn't comment on short-term moves. On China, he said he would name it a currency manipulator if they 'do it again'.
USD/JPY was also driven by bonds as they sold off early but recovered later, in part due to a strong TIPS auction. The pair rallied as high as 115.62 before slipping to 114.84 late.
Cable finished near the highs of the day, up 70 pips to 1.2332. There is some minor resistance up to 1.2350 but overall it was a strong day for the pound.
USD/CAD continued higher after the BOC fall on Wednesday and is slated to close just above 1.33 after touching 1.3353. The gains come despite a small rise in oil prices.
The Australian dollar was unfazed by the jobs report and shook off a few efforts to push it lower. The worst level of US trading was shortly after London left at 0.7529 but it grinded up to 0.7562 later.