- Trump says Mnuchin was misinterpreted, this puts a floor under the dollar
- GBP brushed back after EURGBP had a look at the low of its range
- Tone of Trump's Davos speech eyed – especially as regards China and trade
- Commodities have their best week so far this year because of the weak dollar
- Corporate earnings are starting to miss expectations: EBITDA is down q/q
The accelerated slide experienced by the dollar yesterday after the US treasury secretary spoke of the trade benefits of a weaker greenback was stopped in its tracks last night when President Trump said Steve Mnuchin's comments had been "misinterpreted" and declared that the dollar would strengthen.
The upshot of this was that the dollar found a floor in overnight trade, says John J Hardy, Saxo's head of FX strategy. However, he cautioned against reading too much into such comments and the market gyrations that follow them: "Basically, there's a lot of noise and the algos go crazy on this sort of stuff. People are trying to read between the lines for the intent of the administration but I don't think the administration has a clear rhetorical intent to either drive the dollar up or down," Hardy says.
Trump will remain centre-stage today as he delivers an address (13:00 GMT) at the WEF in Davos. With much singing of his own successes expected, the key thing will likely be the tone of his speech, particularly as to trade and his position on China.
Elsewhere, the corporate earnings season rolls on, but though it initially started quite upbeat, the number of misses increased this week and EBITDA is now down q/q, says Peter Garnry, Saxo's head of equity strategy.
Finally today, the precipitous dollar decline has been good for commodities and this past week has been the best for the sector this year, although by now, some energy and metals futures are starting to look a bit stretched, says Ole Hansen, Saxo's head of commodity strategy.
The Disrupter-in-Chief will speak in Davos today. Expect some boasting.
Images: Joseph Sohm / Shutterstock.com