Article / 13 September 2017 at 22:00 GMT

US Market Wrap: Taxing day for US dollar bears

FX Trade Strategist / www.Loonieviews.net
Canada
rates
 
rates
 












Watch list:

  • UK: RICS Housing Price Balance August 2301 GMT 
  • Australia: RBA Assistant Governor Debelle speech 2315 GMT 
  • Japan: Foreign Investment 2350 GMT 

US Data Released:

  • Producer Price Index-August (Actual 0.2% vs forecast 0.3% 
  • EIA Weekly Crude Oil Stocks Change (Actual 5.888 million barrels vs. forecast 3.24 m/b) 

Today’s FX session started with the US dollar pretty close to where it had finished the day before. Sterling was well below its overnight peak thanks to weak UK wage price data. It was a sign of things to come.

Traders ignored below-forecast PPI data, but not Republican House Speaker Paul Ryan. Ryan said a tax reform plan would be released the week of September 25. Later, President Trump, sounding very “Democratic-ish,” said that under his plan, wealthy Americans could pay higher taxes.

EURUSD dropped, falling from 1.1973 to 1.1881. The latest US tax plan promise and position adjustment ahead of Thursday's US CPI report fueled the drop. It got an assist by comments from ECB Chief Economist Peter Praet. He said ““The baseline scenario for inflation going forward remains crucially contingent on very easy financing conditions which, to a large extent, depend on the current accommodative monetary policy stance.”

GBPUSD dropped from 1.3285 to 1.3185 on both the weak wage data, broad US dollar strength and profit taking.

USDJPY traders dismissed Trump’s remarks about North Korea made on Tuesday and focused on the rise in US Treasury yields. USDJPY rallied to 110.67 from 109.94. The price eased off the peak in the afternoon but remained elevated.

USDCHF rallied ahead of Thursday's Swiss National Bank policy meeting, supported by general US dollar strength.

The Aussie and Kiwi dollars and the Canadian dollar suffered, although a 2.2% rally in WTI oil prices tempered USDCAD gains.

Oil prices soared. The International Energy Agency (IEA) appeared to confirm yesterday’s Opec forecast of rising demand and lower production. The EIA said that the global crude surplus was starting to shrink. That news overshadowed the rise in US crude inventories.

Wall Street closed at record highs for the second day in a row.

s
 House Speaker Paul Ryan said a tax reform plan would be released the week of September 25. Photo: Shutterstock

Opinion

The German election has huge ramifications for Europe. Check out Saxo Bank Chief Economist Steen Jakobsen's article: Macro Digest: 'The most important non-event election in decades'.



– Edited by Susan McDonald



Michael O'Neill is an FX consultant, 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.

Missed a day? Here’s what we had to say during our Asia session, our regular European Morning Markets, From the Floor and Mid-session Europe.

Relevant articles for you

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail