Dollar continues recent gains on optimism of U.S. tax reform, sterling rallies on progress in Brexit talks

Market Review - 08/12/2017  02:16GMT  

Dollar continues recent gains on optimism of U.S. tax reform, sterling rallies on progress in Brexit talks

The greenback was broadly higher against majority of its peers on Thursday as concerns over U.S. government shutdown had eased and market remained sanguine for U.S. tax reform to pass by Dec 22 deadline. Sterling rallied in New York morning on progress in Brexit talk after intra-day wild swings in European trading.  
  
Versus the Japanese yen, dollar extended gain from Wednesday's low at 112.00 and climbed to 112.48 at Asian open then ratcheted higher to 112.80 ahead of New York open due partly to Bank of Japan Governor Kuroda's comments earlier and broad-based usd's strength. Despite intra-day pullback to 112.58 at New York open, the pair later rallied to session highs of 113.15 near the close on broad-based usd's strength.  
  
In a speech given at a seminar, BOJ's Kuroda said the BOJ would continue to "persistently pursue powerful monetary easing" to achieve a well-balanced economic recovery accompanied by stable prices.   
  
Despite initial recovery to 1.1809 in Australia from previous day's trough at 1.1781, the single currency continued recent decline to 1.1776 in Europe. Although price traded sideways in New York morning and briefly jumped to 1.1814 after European close, price later weakened to a 2-week low of 1.1772 near the close on renewed usd's strength.  
  
The British pound went through a roller-coaster ride on Thursday. Although cable moved narrowly in Asia and European morning, price spiked briefly to 1.3422 before tumbling to session lows of 1.3320 ahead of New York open. However, buying emerged, erasing losses and lifted pair. Cable later rallied on EU Commissioner Oettinger's comments that Brexit is making good progress and hit session highs of 1.3484 near the close.  
  
Reuters reported Britain will not sign up to a bad Brexit deal but its economy will succeed even if it does not get a deal, transport minister Chris Grayling said on Thursday.   
  
Reuters reported the European Union's Budget Commissioner Guenther Oettinger said on Thursday that noticeable progress was being made on talks over the divorce bill that London will pay the EU as it leaves the bloc.  
  
In other news, Reuters reported the leader of Germany's Social Democrats (SPD) on Thursday asked party members to give the green light for talks with Chancellor Angela Merkel's conservatives to find a way out of the political impasse and leave all government options on the table. The SPD should enter exploratory talks with the conservative bloc open-minded, look at what kind of policy the party could push through and leave all government options on the table, Schulz said, adding: "Content is important and not the form."   
  
On the data front, the number of individuals filing for initial jobless benefits in the week ending Dec. 1 fell by 2,000 to a seasonally adjusted 236,000 from the previous week’s total of 238,000, the Department of Labor said. Analysts had expected jobless claims to rise to 240,000 last week.  
  
Data to be released on Friday:  
  
Japan current account, GDP, trade balance, eco watchers outlook, eco watchers current, China exports, imports, trade balance, Italy market holiday, Germany exports, imports, current account, trade balance, France industrial output, budget balance, U.K. construction output, industrial output, manufacturing output, trade balance, NIESR GDP estimate, Canada housing starts, capacity utilisation, and U.S. non-farm payrolls, private payrolls, unemployment rate, average earnings, University of Michigan sentiment, wholesale inventories and wholesale sales.