21 March 2017 at 21:42 GMT
- Australia: WestPac Leading Index 2330 GMT
- Japan: Merchandise Trade Balance 2350 GMT
- Japan: Bank of Japan Monetary Policy meeting minutes 2350 GMT
US Data Released
- Current Account, Q4 (Actual $112.4 billion vs. forecast -$128.2 bn)
Dollar bulls were skittish and looking for an excuse to run. They found it on Wall Street when the major equity indices plunged. The Nasdaq led the indices lower, dropping 1.84%. US stocks fell the most since Donald Trump‘s election in November last year, according to a Bloomberg article. The US dollar was under pressure when New York traders walked in. EURUSD opened at 1.0792 and spent the day bouncing between the opening level and 1.0817 supported by bullish EURUSD technicals and bearish USDX technicals.
USDJPY popped up to ¥112.65 around breakfast and then sank steadily, finally finding a floor in the late afternoon at ¥111.55.
Sterling hung on to all its post-inflation data gains and closed just below the day’s peak of 1.2492.
The common denominator for the performance of the “big three” was the drop in US equity prices. In the absence of top tier US data releases, traders got themselves into a lather over political developments. They concluded that if the Republicans struggle to repeal Obamacare, then perhaps President Trump’s highly touted tax cut plans would be watered down. That was all the excuse they needed to take some profits off the table.
The commodity currency bloc rode a wild roller-coaster. NZDUSD rallied from 0.7045 to 0.7088 on news that prices at the Global Dairy Trade auction rose 1.3%, a marked improvement over the previous 6.3% decline. The Aussie and the Loonie were also rallying at that time supported by broad US dollar weakness and a spike higher in oil prices. But none of the moves lasted past lunch time, and the US dollar closed the day with gains against these three currency pairs.
Oil traders became unnerved by news that Goldman Sachs analysts warned of a million barrels per day leap in crude production due to new projects and a fresh shale boom.
Dairy driven ... NZDUSD rallied on news that Global Dairy Trade auction prices rose 1.3%, in a welcome contrast to the previous price slide. Photo: Shutterstock
– Edited by Robert Ryan
is an FX consultant and currency strategist and author of the Trade of the Day at Loonieviews.net.
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