- December NAHB Market Index beats forecast
- Wall Street pops on tax deal hopes
- Choppy trading in thin markets leaves EUR and Kiwi with small losses
By Michael O'Neill
NY Focus: The US dollar was on the defensive at the open and stayed that way throughout the day. The opposing views on the Federal Open Market Committee were on full display.
Minneapolis Federal Reserve President and noted dove, Neel Kashkari said low inflation, wage weakness and a flattening yield curve caused him to dissent at last week’s vote.
His hawkish colleague, San Francisco Fed President John Williams, said: “We are operating on all cylinders which is, I think, a positive sign of the sustainability of the expansion."
He went on to say that “something like three rate increases in 2018 seems like a reasonable view.”
Senator McCain's illness could cause a delay to the US tax bill vote. Photo: Shutterstock
Neither central bankers' remarks had much of an impact. EURUSD closed with a tiny loss and USDJPY closed unchanged from the open.
Wall Street bought equities on renewed hopes that the Republican tax reform bill will land on President Trump’s desk on Wednesday.
However, CNN is reporting that Senator McCain may be too ill to vote which could cause a delay.
Gold prices rallied as the greenback retreated. XAUUSD climbed from $1,256.70/oz to $1,263.84/oz and dropped to $1,261.50 at the close.
Oil traders continued to be encouraged by the North Sea Forties pipeline problems but had concerns about rising US production.
The US production worries won the day. WTI dropped from $57.65 to $56.81/b.. Prices bounced to $57.15/b at the close.
Tuesday Focus: The German IFO Survey may give EURUSD some support if the three key components (Business Climate, Current Assessment and Expectations) beat forecasts, EURUSD bounced off the uptrend line from the beginning of November.
The break above minor resistance at 1.1750 targets further gains to 1.1850. However, the moves are merely noise inside the 1.1710-1.1880 range that has held since December 12.
EURUSD four-hour chart
Source: Saxo Bank
-- Edited by Adam Courtenay
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.