US Open Preview: Dollar surrenders Trump-related gains ahead of key data and speeches

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  • US Open Preview: Dollar surrenders Trump-related gains ahead of key data and speeches

    Here are the latest developments in global markets:

    • FOREX: The dollar has remained on the back foot, with the dollar index being almost 0.6% lower, giving back nearly all the gains it posted yesterday following President Trump’s comments. The biggest beneficiaries of the greenback’s weakness were the Swiss franc and the British pound, both trading 0.8% higher against the USD. The Australian dollar followed closely, with aussie/dollar up 0.7%. Dollar/loonie was down more than 0.5%, weighed on by a weaker greenback and elevated oil prices.
    • STOCKS: European stocks were a sea of green at 1130 GMT. The blue-chip Euro STOXX 50 was up 0.4%, while the pan-European STOXX 600 was nearly 0.5% higher. The charge was led by the French CAC 40, up almost 0.9% in the day, while the British FTSE 100 was 0.5% higher. Meanwhile, the German DAX 30 was practically flat.
    • COMMODITIES: Oil prices erased their earlier losses and rebounded, with WTI and Brent crude both up by 0.2%. Later today at 1800 GMT, the Baker Hughes US oil rig count could provide markets with some clues as to whether US production has started to rise again in the face of higher prices. Elsewhere, gold was more than 0.4% higher, as the pullback in the USD helped to make the dollar-denominated precious metal appear more attractive.

    US Open Preview: Dollar surrenders Trump-related gains ahead of key data and speeches

    Day ahead: US GDP and Canadian inflation prints due out; Davos speeches eyed

    Economic releases will be in the spotlight during the European afternoon on Friday, with markets likely to focus predominantly on US GDP growth and Canadian inflation data. After that, attention will shift to Davos, where US President Donald Trump, BoE Governor Mark Carney, and BoJ Governor Haruhiko Kuroda, will all deliver remarks.

    In the US, the preliminary estimate of GDP for the final quarter of 2017 is due at 1330 GMT, and expectations are for economic growth to have slowed to 3.0% on an annualized basis, from 3.2% in the previous quarter. Interestingly enough though, both the Atlanta Fed GDPNow and the New York Fed Nowcast models project an acceleration in growth, to 3.4% and 3.9% respectively. In case of a positive surprise in the official figures, the dollar could recoup some of its latest losses. The US will also see the release of durable goods orders for December at exactly the same time as the GDP numbers, implying that any market reaction at the release may be influenced by those figures as well.

    Over in Canada, CPI data for December are due for release at 1330 GMT as well. Expectations are for the headline inflation rate to decline to 1.9% in yearly terms from 2.1% previously, while no forecast is available for the core CPI print. These data could play a major role in determining how many more times the Bank of Canada will raise rates this year and thus, they are likely to have a sizeable impact on the CAD.

    In terms of public appearances, investors will turn their eyes to the World Economic Forum in Davos, where US President Trump will speak at 1300 GMT. Then at 1600 GMT, the Governors of the Bank of England and the Bank of Japan will participate in a panel discussion with the head of the International Monetary Fund, Christine Lagarde.

    Later during the day at 1800 GMT, oil traders will turn their attention to the US Baker Hughes oil rig count. The number of active US oil rigs has remained more or less flat in recent weeks even despite the surge in oil prices. It will be interesting to see whether US producers have begun to react to the higher prices, with any increase in the number of active rigs likely to dent some of the optimism currently surrounding the energy market.

    In stock markets, Honeywell International Inc. and Gentex Corporation are among companies to report quarterly earnings before the US markets open today.

    US Open Preview: Dollar surrenders Trump-related gains ahead of key data and speeches

    Source: Trade Forex with XM.

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