Article / 13 September 2017 at 22:00 GMT

US Market Wrap: Taxing day for US dollar bears

FX Trade Strategist /

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.

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


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 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.


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