Forex news for January 31, 2017:

  • US trade advisor: Germany is using a grossly undervalued euro to exploit the US - FT
  • Trump: Other countries have taken advantage of us with devaluation
  • Trump names China and Japan as countries who have competitively devalued
  • US Jan consumer confidence 111.8 vs 112.8 expected
  • January 2017 US Chicago PMI 50.3 vs 55.0 exp
  • November 2016 US Case Shiller house prices 5.3% vs 5.1% exp y/y
  • Q4 2016 US employment costs index 0.5% vs 0.6% exp
  • Canada November GDP +0.4% vs +0.3% m/m expected
  • ECB's Lane: Brexit doesn't affect the current policy status quo
  • Ray Dalio increasingly concerned about Trump's populism
  • ECB's Lane: Brexit doesn't affect the current policy status quo
  • Ray Dalio increasingly concerned about Trump's populism
  • France's Le Pen election platform sees 6 months of negotiations for euro exit - Livesquawk
  • Tusk says new US administration puts EU in a "difficult situation"

Markets:

  • Gold up $16 to $1212
  • WTI crude up 23-cents to $52.85
  • S&P 500 down 2 points to 2278, up 1.8% in the month
  • US 10-year yields down 3.7 bps to 2.45%
  • EUR leads, USD lags

Germany, China and Japan were on Trump's and his team's hit list on Tuesday. A trade advisor started with comments on the euro that sent it on its way to a 100 pip gain and he made it clear that wasn't a misspoken message by singing a similar tune later and adding China and Japan to the mix.

The comment about Japan sent USD/JPY down to 112.08 from as high as 113.96 in European trade. The bulk of the fall was recovered in a retracement to 113.30 and the pair is consolidating. But at the lows the pair was at the worst levels since November and the daily chart is beginning look negative.

Another chart to note is USD/CAD as it broke a series of bottoms near 1.3000 in a drop to the lowest since September. It didn't close below support and we will be watching for comments from Poloz later. The last time he spoke, he mentioned a rate cut being on the table and that sent USD/CAD up more than 300 pips.

Cable slumped on data in European trading but what had been a nearly 100 pip fall turned into a 100 pip gain as the US dollar struggled. The pair is currently testing yesterday's high of 1.2600.

If you haven't had a chance, take a close look at the daily charts because the US dollar is at a tipping point on a few fronts.