Forex Today: dominated by US political uncertainties and a change of mood in the dollar

Ross J Burland FXStreet

Forex today was dominated by US political uncertainties, a weak dollar and a modest narrowing of the yield gaps across the G7's .The yen picked up the majority of the bid in that respect along with the euro.

There was some follow-through from last nights less dovish rhetoric from BoJ's Kuroda supporting a retracement to back below the 113 handle. The euro rallied to the highest levels since last Nov while the commodity currencies got a free ride on the dollar weakness as well.

The US economy is shaping up to be less appealing to global investors who are now looking offshore in such markets as the EM's. There are doubts over the ability of Wall Street to continually run on hot air and Trump's "make America great again" comes under scrutiny as political uncertainties get in the way. Data continues to let investors down and in stark contrast to what the Fed officials have been expecting, (except IP was the strongest in three years today).

Markets shrugged off the US IP data and instead reacted to offshore positives, such as euroland GDP and German ZEW. The dollar also got a hit on political uncertainties around Trump/Russian relations and poor US housing data that surprised to the downside. US yields dropped to test the 2.3% psychological level, a game changer for the dollar and the DXY is finishing the day around 0.80% lower for a YTD return so far of nearly -4%.

GBP/USD was good two-way business between 1.2866 and 1.2958. USD/JPY is down -0.65% between a range of 112.93-113.80% for today, currently testing 113.00 again. The Candian dollar (-0.35%), Aussie (+0.26%) and Kiwi (+0.10% weighed slightly by GDT price index miss -0.4% vs expectations) all got a boost from the commodity sector ramping up gains. Gold is also up on the day, +0.53%.

The day ahead:

While there are key events in Europe in UK jobs data dn EZ CPI, there is very little on the cards from Asia although some possibilities in second tier data as follows:

GMT	Event	Consensus	Previous
Tuesday, May 16
20:30	USD API Weekly Crude Oil Stock		-5.78M
22:45	NZD Producer Price Index - Input (QoQ)		1%
22:45	NZD Producer Price Index - Output (QoQ)		1.5%
23:50	JPY Machinery Orders (YoY)	0.6%	5.6%
23:50	JPY Machinery Orders (MoM)	2.1%	1.5%
Wednesday, May 17
n/a	PLN NBP Base rate	1.5%	1.5%
24h	NOK Constitution Day
00:30	AUD Westpac Consumer Confidence Index		99
00:30	AUD Westpac Consumer Confidence		-0.7%
01:30	AUD Wage Price Index (QoQ)	0.5%	0.5%
01:30	AUD Wage Price Index (YoY)	1.9%	1.9%
02:00	CNY FDI - Foreign Direct Investment (YTD) (YoY)		1%
04:30	JPY Industrial Production (YoY)		3.3%

Key notes from the US shift:

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

EUR/USD weakens toward 1.1600 as firm US data revives the US Dollar

The EUR/USD edged lower on Thursday, down some 0.21% as market sentiment remains risk averse due to the ongoing conflict in the Middle East. This and solid US economic data pushed the pair lower towards the 1.1600 figure ahead of Friday’s session.

GBP/USD drifts lower heading into NFP range

GBP/USD edged lower by 0.2% on Thursday, settling close to 1.3350 in a strained trading session that kept the pair pinned near three-month lows. Price briefly recovered earlier in the day on reports that Iran had indirectly signaled openness to talks with the CIA, but the bounce faded as Israeli officials reportedly advised Washington to disregard the overture.

Gold slumps below $5,100 as US Dollar gains

Gold price tumbles to near $5,085 during the early Asian session on Friday. The precious metal loses ground amid a stronger US Dollar. The US employment report for February will take center stage later on Friday.

NYSE parent Intercontinental Exchange partners with OKX, invests at a $25B valuation

OKX announced an investment from Intercontinental Exchange, raising its valuation to $25 billion, alongside a partnership to expand regulated crypto futures and tokenized equity offerings globally.

Two PMIs, two Chinas

China’s economic data are often treated with a degree of caution by global investors. The challenge is not necessarily that the numbers are incorrect, but that they can describe very different parts of a vast and complex economy. Nowhere is that more evident than in China’s PMIs.

Ripple tests recovery strength amid steady ETF inflows, growing retail interest

Ripple (XRP) continues to demonstrate notable resilience as the cryptocurrency market navigates the persistent war in the Middle East after the United States (US) and Israel attacked Iran on Saturday.