Dollar falls vs yen and chf on soft U.S. data, sterling tumbles to 2-week low on hard-Brexit woes

Market Review - 19/12/2019 23:44GMT  

Dollar falls vs yen and chf on soft U.S. data, sterling tumbles to 2-week low on hard-Brexit woes

The greenback ended the day lower against majority of its peers on Thursday, weighed down by President Trump's impeachment concerns together with soft U.S. data and falling Treasury yields. Sterling continued its recent losing streak and fell across the board on continued concerns of a hard Brexit.  
  
Versus the Japanese yen, although dollar briefly rose to session highs at 109.67 at Asian open, price met renewed selling and fell to 109.46 in Europe on safe-haven jpy buying after news reported that the U.S. House of Representatives voted for two articles of impeachment against President Donald Trump before rebounding to 109.51 at New York open but only to fall to an intra-day low of 109.19 in New York afternoon on weakness in U.S. Treasury yields.  
  
Reuters reported the U.S. House of Representatives approved the first of two articles of impeachment against President Donald Trump on Wednesday, voting almost entirely along party lines that he had abused his power by pressuring Ukraine to investigate a political rival.   The 230 to 197 vote found every single one of the chamber's Republicans voting against the impeachment charge, while all but two Democrats voted for it.   The House now holds a second vote on a second article of impeachment that charges the Republican president with obstructing Congress by refusing to cooperate with the impeachment investigation.    And In a third report on Thursday, the Philadelphia Federal Reserve said its business conditions index dropped to a reading of 0.3 in December from 10.4 in November. But there were increases in measures of new orders, unfilled orders, factory hours and shipments.  
  
Although the single currency traded with a firm bias in Asia and rose to session highs at 1.1144 in European morning due partly to cross-buying vs sterling, price erased its gains and tumbled to an intra-day low at 1.1108 in New York morning before staging a recovery.  
  
The British pound went through a roller-coaster ride yesterday as despite edging up to 1.3128 in European morning, price dropped to 1.3053 in Europe. The pair then briefly spiked up to session highs at 1.3133 after Bank of England kepts its rate unchanged before tumbling to an intra-day low at 1.2990 at New York midday on active broad-based selling in sterling.  
  
Reuters reported the Bank of England kept interest rates steady on Thursday, saying it was too soon to gauge how much Prime Minister Boris Johnson's election victory would lift the Brexit uncertainty that has hung over the economy.  Two of the BoE's nine policymakers voted for a second month in a row for a cut to borrowing costs due to fears the job market is deteriorating.  But the majority of the Monetary Policy Committee took a wait-and-see approach.    
After Johnson's emphatic election win last week, Britain is on course to leave the European Union on Jan. 31 with a transition deal, which the BoE said could limit some of the immediate uncertainty hovering over businesses.  At this week's BoE meeting, policymakers Michael Saunders and Jonathan Haskel once again voted to cut rates, saying the central bank need to move quickly to respond to signs that Britain's robust job market was faltering.  For the seven others, it was too soon to take action. Economic growth was expected to pick up in early 2020 thanks to the easing of Brexit uncertainty, higher spending by the government and a recovery in global economic growth, they said.  
  
In other news, Reuters reported U.S. Treasury Secretary Steven Mnuchin said on Friday the United States and China would sign their so-called Phase one trade pact at the beginning of January, adding that it was completely finished and just undergoing a technical "scrub."  Mnuchin, speaking to reporters at the White House, said the trade deal had already been put down on paper and translated, and that it would not be subject to any renegotiation.  "We are going through a technical issue now where again the agreement is translated," Mnuchin said. "I don't expect there's any changes. We'll sign the agreement in the beginning of January."  
  
On the data front, Reuters reported the number of Americans filing applications for unemployment benefits dropped from more than a two-year high last week, pointing to sustained labor market strength.  Initial claims for state unemployment benefits decreased 18,000 to a seasonally adjusted 234,000 for the week ended Dec. 14, the Labor Department said on Thursday.    Though the drop did not unwind the prior week's jump of 49,000, it likely does not indicate a material shift in labor market conditions as claims data tend to be volatile in the period following the Thanksgiving Day holiday.  
  
Data to be released on Friday :  
  
Japan national CPI, core national CPI, UK GfK consumer confidence, GDP, current account, PSNB, PSNCR, China PBoC interest rate decision, Germany GfK consumer confidence, France consumer spending, producer prices, Italy MFG business confidence, consumer confidence, producer prices, trade balance, EU current account, consumer confidence, U.S. GDP, PCE prices, personal income, personal spending, core PCE price index, PCE price index, University of Michigan sentiment, KC Fed manufacturing activity, and Canada new housing price index, retail sales, retail sales ex-autos.