The US dollar was under pressure at the start of this week, losing ground to the euro by 80 pips, close to 40 pips to the Aussie and $10 to Gold. Markets were somewhat nervous ahead of President Trump’s first address to Congress. However, the US afternoon trade has seen a complete reversal and the DXY has found territory back on the 101 handle at 101.18 the highs. Yields edged higher and stocks were on to track for yet further gains with the major benchmarks on course for record highs again. US 10yr treasury yields rallied from the multi-week low of 2.31% to 2.36%, while the 2yr rose from 1.14% to 1.20%.
European trade offered some upbeat data for the EU while US data had the United States Durable Goods Orders that arrived above forecasts (1.7%) in January: Actual (1.8%) and ex Transportation came in at -0.2%, below expectations (0.5%) in January - in summary, this was a good enough outcome to support positive GDP forecasts. However, pending home sales were not so pretty and fell 2.8% in Jan (vs +0.6% expected). Subsequently, the Atlanta Fed’s GDP model rose 0.4% and predicts a 2.5% annualised rise in Q1. Trump news was hitting the wires when he said infrastructure spending would be large, and defence spending would increase and created a mixed outcome for the dollar that was ending the session little changed despite the hard rally.
Day ahead
Later today, things start to get busy in Asia with New Zealand's trade balance expected to arrive flat, NZ ANZ Business Confidence, the M3 Money Supply for NZ, Japanese Industrial production, Aussie HIA New Home Sales, Australian current account, UK GfK Group Consumer Confidence, the Aussie current account balance and private sector credit. The focus will then be back to Trump for details on his fiscal plans and timing during his address to a joint sitting of Congress. US Q4 GDP, likely to be revised slightly higher in the second estimate.
Main topics in U.S. session
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