Stephen Innes
SPI Asset Management
No need to elaborate in detail today as the dollar is firming “on a wing” that White House press corps is correct that the Trump Administration is readying an infrastructure plan for Jan 30 and a “prayer” for a tax bill deal
While the US economy is booming, President Trump’s long-standing pledge may be upon us as infrastructure spending at both a federal and state could be a real game-changer for the dollar as the resulting massive pick up in business investment could propel the US economy to 4% growth,ceteris paribus. The headline boosted stocks and yields in late NY trading and lit a fire under the dollar bulls. The one exception was Sterling which bucked the trend dollar on reports that Prime Minister May and the DUP were close to a deal on the Irish border deadlock.
Looking forward, an extension of the latest dollar churn might all boil down to this evenings wages data with the tail risk for a hawkish inference on the employment headline. The jobs report will play a significant factor in keeping the dollar rally alive and forwarding the view of an early 2018 rate hike
Japanese Yen
The bounce in US yields was convincing enough to propel USDJPY through the 113 level and only held back by the YCC debate after Governor Kuroda recapitulated his Hawkish deterrent overnight.
Also, the long USDJPY trade appears stable as some element of diplomacy enters the NK fray.
The Pound
Apart from digesting the infrastructure stage whispers surrounding Brexit will continue to drive GBP sentiment
Gold
Predictably XAU hastened losses on this infrastructure news – as the sell the recent sell-off gathers speed as bid remain far and few between
Energy Markets
Muted trading despite the boisterous inference from the US tax reform and fiscal spend one-two punch.But perhaps fears that the Trump administration may float a gas tax to pay for infrastructure spending are presenting some headwinds?
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