Article / 26 January 2018 at 8:00 GMT

Morning Markets: Trump backs stronger USD

Head of Editorial Content / Saxo Bank
Denmark

Morning Markets


Watchlist

  • EU: Monetary developments (0900 GMT)
  • UK: Preliminary GDP (0930 GMT)
  • US: Advanced estimate GDP (1330 GMT)
  • US: Advance report on durable goods (1330 GMT)
  • Canada: CPI (1330 GMT)

The US dollar's protracted decline ended overnight in the wake of a statement from President Trump.

Addressing press one day after Secretary of the Treasury Steven Mnuchin was out extolling the virtues of a weaker USD in trade terms, Trump stated that “the dollar is going to get stronger and stronger and ultimately I want to see a strong dollar.”

USD gained ground across the board with USDJPY retaking the 109 handle and EURUSD pushing determinedly back below 1.25.

Asian bourses moved higher in the APAC session on the retreat in local currencies while gold pared its losses.

Today's data calendar sees Trump speaking in Davos, a preliminary GDP release from the UK at 09:30 GMT, a US advance estimate GDP print at 13:30 GMT, and Canadian CPI data at the same time.

Market signals

Asian session

  • The Dow and S&P 500 reached their highest levels ever on Thursday
  • However, Wall St fell after Donald Trump's strong USD comments in Davos
  • Trump contradicted earlier comments on USD from Treasury Secretary Steven Mnuchin
  • Volatility surged in global markets after Trump's strong USD comments
  • But most Asian equity markets were comparatively subdued following the comments
  • Hong Kong's Hang Seng rebounded; it was up 1.65% to 33,193.31 at 0641 GMT
  • Gains for Chinese banking giants were behind the surge in the Hang Seng
  • The Shanghai Composite was up 0.55% to 3,567.72 at 0640 GMT
  • Japan's Finance Minister Aso: top economies agreed not to target FX for trade benefits
  • Japan’s core consumer prices rose 0.2% in December; they rose just 1% in annual terms
  • Brent oil topped $71/barrel for the first time overnight
  • Gold extended its 10% surge from mid-December to reach its highest since August
  • Markets were closed in Australia for the Australia Day public holiday
  • Donald Trump says he'd reconsider joining the TPP trade pact if the US gets a better deal

Forex ahead

  • Trump's strong dollar comments drove a USD rebound, and undermined AUD
  • The yen lost ground following comments from Finance Minister Taro Aso
  • The US dollar was worth 109.1900 at 0643 GMT
  • The AUD alter regained some of its slide; it was worth 0.8050 at 0542 GMT
  • Next week's release of Australia's CPI for Q4, 2017 could impact AUD

In opinion

Sterling moves
The mixed signals around the Trump administration's currency views, combined with UK and US GDP data, may lead to another wild trading day in sterling, writes Michael O'Neill.

No change
The ECB left rates unchanged as widely expected, with forward guidance also remaining the same, says Saxo's Singapore trading team.


kfd

 Japan’s price gauge rose at the same sluggish pace in December as in November, highlighting the BoJ's challenge in achieving its 2% inflation target. Photo: Shutterstock

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