John J Hardy
Saxo Bank’s head of FX strategy John Hardy takes a closer look at trends and moves in today’s forex charts, including EURUSD, USDJPY, AUDUSD, and EURSEK.
Article / 20 December 2017 at 22:23 GMT

US Wrap: Greenback mixed after strong data and tax reform deal

FX Trade Strategist /
  • Tax reform deal heading to Trump’s desk for signature 
  • Existing home sales at 11-year high 
  • Oil prices rise on crude inventory drop 

By Michael O'Neill

NY focus: There was a lot going on but FX traders just didn’t want to know. The greenback finished the day the way it started: mixed. The euro, CAD and Swiss franc inched higher, while the kiwi was flat. The rest were a tad weaker, led by the Japanese yen.

The long-awaited, hotly contested US tax reform bill now just needs President Donald Trump’s signature. When he signs it is anybody’s guess. US existing home sales rose to 11-year highs, rising 5.6%, month-on-month in November.

Wall Street couldn’t care less about the economic data or the tax reform bill. The three major indices closed with tiny losses in thin trading.

EURUSD spiked to 1.1900 after trading at 1.1832, despite the tax news and the existing home data, further evidence of holiday market trading.

USDJPY rose from 113.09 to 113.45 on rising US Treasury yields, but prices remain well below the October peak of 114.50. Traders may be expecting a somewhat dovish Bank of Japan policy statement.

Sterling rallied in the morning and dropped rapidly in the afternoon, falling from 1.3410 to 1.3372. 

 Nothing was stirring ... the three major US indices closed with tiny losses in thin trading despite strong economic data and the tax reform bill being passed. Photo: Shutterstock

The UK Guardian reported that Deputy Prime Minister Damian Green was forced to resign after pornography was found on his computer. More disturbing, was that Prime Minister Theresa May expressed her “enduring gratitude" for his contributions.

USDCAD declined undermined by better than expected Canadian wholesale sales data and rising oil prices. AUDUSD was choppy and finished with a tiny loss while the kiwi was unchanged. 

Better-than-expected New Zealand Q3 GDP (Actual 0.6% vs forecast 0.5%, q/q) boosted NZDUSD to 0.7001 from 0.6978 after New York closed.

WTI oil prices were erratic around the EIA crude stocks change report. US inventories dropped 6.49 million barrels. WTI reluctantly rallied to $59.09 from $58.43.

Thursday focus: US Q3 GDP (forecast 3.3%) and the Philadelphia Fed Manufacturing Survey are due. An upside surprise to GDP would lead to sharp US dollar gains. The combination of better-than-expected GDP, the proximity to strong resistance in the 1.1940-60 area and record high long EURUSD speculative gains could lead to a test of the November uptrend line at 1.1780.

EURUSD four-hour
saxo Source: Saxo Bank. Create your own charts with SaxoTrader; click here to learn more 

– Edited by Gayle Bryant

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.
21 December
Morten Olby Morten Olby
Good morning Michael, thanks for staying on board even into the last hours here before Xmas. What would a dovish BOJ mean to the dollaryen. I think it starts to look stretched at 113,60


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