28 February 2017 at 22:17 GMT
- Japan: Retail Trade (2350 GMT)
- Industrial Production (2350 GMT)
US data released
- GDP Q4 (Actual 1.9% vs. forecast 2.1%)
- Wholesale Inventories (Actual -0.1% vs previous 1.0%)
- Q4 PCE (Actual 1.9% vs forecast 2.2%, Core 1.2% vs. 1.3%)
- S&P Case-Shiller Home Price Index – December (Actual 5.6% vs. forecast 5.3%, y/y)
- Chicago PMI – February (Actual 57.4 vs forecast 53.0)
- Consumer Confidence – February (Actual 114.8 vs. forecast 110.9)
- API Crude Stocks Change (Actual 2.5 million barrels vs. previous 0.994 m/b)
There was a lot of quality US economic data to sift through on Tuesday and normally that would set the tone for FX markets. Except it’s not normal (US President Donald Trump has seen to that) so that data didn’t have much of an impact on trading.
Tuesday’s economic reports merely served to pad both sides of the US rate-hike argument. Hawks will tout the improvement in consumer confidence, the surge in Chicago PMI and a bump in home prices. Doves will coo about the miss in GDP and PCE.
Month-end madness was in full swing with big gains in US equity indices in February compared with international indices fuelling US dollar selling for the 1600 GMT fix.
EURUSD rose from 1.0586 to 1.0629; GBPUSD climbed from 1.2405 to 1.2468 and USDJPY dropped from 112.27 to 111.68. Those moves were completely erased in the afternoon and EURUSD and USDJPY currencies closed virtually unchanged from the open.
GBPUSD had a small loss. The antipodeans traded in a similar fashion. AUDUSD moved from 0.7665 to 0.7692 and then retreated back to 0.7660 at the close. NZDUSD started at 0.7195, and climbed to 0.7234 before dropping to 0.7195.
The Canadian dollar was the odd man out. USDCAD selling from month-end portfolio rebalancing was overwhelmed by very “chunky” USDCAD buying as a result of the closing of the Enbridge/Spectra energy merger. Apparently, the US shareholders (fund managers) holding Spectra Energy did not want Canada’s Enbridge in the portfolios.
Reuters reported that San Francisco Fed President John William’s said: "In my view, a rate increase is very much on the table for serious consideration at our March meeting. We need to gradually ease our foot off the gas in order to avoid a 'too hot' economy that in the end isn’t sustainable." Unfortunately, all ears are tuned to President Trump's upcoming speech.
Wall Street closed in the red. The Dow Jones Industrial Average ended its winning streak of 12 consecutive record closes with its 0.12% decline today. Oil prices dropped in the morning, falling to $52.10 from $52.90. They recouped all the losses in the afternoon. Prices dipped in after-hours trading when API reported another weekly increase in crude inventories.
A big yawn. US data released on Tuesday had little impact on trading. Photo: Shutterstock
President Trump's speech may be key to a March rate hike writes TradingFloor contributor Neil Staines in: Waiting for Trump(ot).
– Edited by Gayle Bryant
Michael O'Neill is an FX consultant and currency strategist and author of the Trade of the Day at Loonieviews.net. Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.