Markets

US Dollar Digests Gains, Awaits News on Trump Economic Team

DailyFX.com -

Talking Points:

  • US Dollar corrects lower after longest win streak in three years
  • Japanese Yen under pressure as most stocks rise in Asian trade
  • Trump economic team appointments may rattle global markets

The US Dollar corrected lower against most of its major counterparts in overnight trade. The move appeared to be corrective after the greenback rose for ten consecutive days against its major counterparts, marking the longest winning streak in over three years. The relentless advance has reflected a sharp steepening of the projected Fed rate hike trajectory following the US presidential election.

It was the Japanese Yen that underperformed however, moving broadly lower against the other majors. Most Asian stock indexes pushed higher, putting pressure on the perennial anti-risk currency. Sentiment trends overshadowed the release of October's trade figures , where an overall balance that was little changed compared with the prior month was nonetheless disappointing relative to expectations of a larger surplus.

Looking ahead, the absence of top-tier scheduled event risk in European and US trading hours suggests that establishment momentum will find few roadblocks to disrupt continuation. S&P 500 futures are pointing higher, hinting that well-supported risk appetite will continue to bode ill for the Yen. Meanwhile the greenback may continue to retreat as investors digest recent gains.

The consolidative mood may prove short-lived however. Markets remain decidedly vulnerable to headline risk as US President-elect Trump continues to fill out his cabinet. Investors are keen to see who will implement the new administration's economic policy program, particularly as Treasury Secretary. A big-splash announcement may swiftly snap markets out of corrective mode.

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Asia Session

GMT CCY EVENT ACT EXP PREV
18:50 JPY Trade Balance (OCT) ¥496.2b ¥610.0b ¥497.6b
18:50 JPY Trade Balance Adjusted (OCT) ¥474.3b ¥404.3b ¥358.5b
18:50 JPY Exports (YoY) (OCT) -10.3% -8.5% -6.9%
18:50 JPY Imports (YoY) (OCT) -16.5% -16.1% -16.3%
21:00 NZD Credit Card Spending (MoM) (OCT) 2.8% - 3.2%
21:00 NZD Credit Card Spending (YoY) (OCT) 10.2% - 8.5%
23:30 JPY All Industry Activity Index (MoM) (SEP) 0.2% 0.0% 0.2%
0:00 JPY Supermarket Sales (YoY) (OCT) 0.6% - -3.2%
2:00 JPY Convenience Store Sales (YoY) (OCT) 0.2% - 0.0%

European Session

GMT CCY EVENT EXP PREV IMPACT
3:00 CHF Money Supply M3 (YoY) (OCT) - 3.0% Low
4:00 CHF Total Sight Deposits - 519.9b Low
4:00 CHF Domestic Sight Deposits - 449.8b Low
11:00 EUR ECB's Draghi Speaks at European Parliament - - Medium

Critical Levels

CCY Supp 3 Supp 2 Supp 1 Pivot Point Res 1 Res 2 Res 3
EUR/USD 1.0452 1.0526 1.0558 1.0600 1.0632 1.0674 1.0748
GBP/USD 1.2092 1.2226 1.2284 1.2360 1.2418 1.2494 1.2628

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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