Article / 28 February 2018 at 22:07 GMT

US Wrap: Month-end demand turbocharges dollar

FX Trade Strategist / www.Loonieviews.net
Canada
  • US dollar bulls ignore spate of soft economic data reports 
  • Key USDX resistance in 90.50-55 area crumbling 
  • US Treasury yields and Wall Street slide 

By Michael O’Neill

NY focus: Traders wanted dollars. Soft data be damned. There isn’t a whole lot of nice things to say about today’s US economic reports, except that perhaps lousy weather may have played a role in the worse-than-forecast results. Q4 GDP came in at 2.5% as forecast but lower than the previous report. Chicago PMI (Actual 61.9 vs forecast 64.2) and January Pending Home Sales (Actual -4.7 vs forecast 0.3%, m/m) were also soft.

The US dollar was a mixed bag to start the day but it finished decisively, with gains across the board. Federal Reserve Chair Jerome Powell’s Congressional testimony had given the greenback a bit of gas and month-end demand for dollars turbocharged the move.

EURUSD dropped from 1.2219 at the open to 1.2189 by 1600 GMT. An “after-fix rebound" stalled at 1.2220 and EURUSD drifted lower. GBPUSD and USDJPY traded lower throughout the day. Brexit issues around border issues in Ireland added to sterling’s woes. The drop in US Treasury yields undermined USDJPY.

The New Zealand dollar outperformed, finishing flat for the day while the AUD and CAD sank.

Oil prices took it on the chin. WTI dropped 2.4% in New York when the Energy Information Administration reported a 2.483 million barrel rise in crude inventories. The fall was compounded by the month-end dollar rally.

Wall Street closed with another down day, led by a drop in the Dow Jones Industrial Average. The DJIA lost 4.20% in February, S&P 500 was down 3.89%, and Nasdaq lost 1.87%.


jjj
 Turbocharged ... the US dollar was a mixed bag at the start of the day but it finished decisively, with gains across the board. Photo: Shutterstock

Thursday focus: EURUSD appears to be breaking down, supported by the move below support in the 1.2200-20 area. That is coinciding with a move above the 90.50-55 resistance area in the USDX. Weaker-than-expected Eurozone Markit Manufacturing PMI (forecast 58.5) could exacerbate selling, targeting 1.2090. 

EURUSD 4-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 Loonieviews.net. Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.

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