Forex today: political turmoil in White House and data send dollar off a cliff


Forex today was giving us more concerns about the internal affairs of the White House and the revolving door of top personnel with headlines that Secretary of State Tillerson had been fired. 

The DXY  traded on the offer between 89.591 - 90.112 while the US 10yr treasury yield fell from 2.88% to 2.84% following the US CPI data and the political turmoil headlines, while 2yr yields held steady at 2.25%. The Fed fund futures continued to price three more hikes by end-2018 (and another hike in 2019). CPI showed headline consumer prices rising at an annualized 2.2% during February and 0.2% inter-month, but, taking out food and energy costs, CPI only rose 1.8% year/on year and by just 0.2% on a monthly basis vs 0.3% prior. 

As for other currencies, EUR/USD entered the US open  -0.04% and rose from 1.2340 to 1.2400, responding mostly to the CPI data and the Tillerson headlines after an initial soft spell in the European markets weighed by funding costs, although on the 1.23 handle and well above the 55DMA at 1.2258 key support area. The euro made a session high of 1.2407 for a handover just below the handle at 1.2390 with the  RSIs posing a bullish bias while the 10 & 21-DSMAs comes as supports above the daily cloud.

GBP/USD was subdued below the 1.39 handle in London, supported on dips to 1.3880 while awaiting Hammond's half-yearly update on the UK public finances. Cable moved over to NY traders looking better bid and traded within a range of 1.3994-1.3887, passed onto early Asia at 1.3973 after Hammond offered a more upbeat assessment of the UK economy than what has been reflected in the price and headlines in the media. 

EUR/GBP was stuck in a 20 pip range in the European markets between  0.8865-0.8885 and ended NY at 0.8867 and 10 pips below the previous session's close on the previous day.  The BOEWATCH us pricing in 2 rate hikes for 2018; +25bp in May, 1 more in Nov/Dec while the ECB looks to be on hold, potentially tweaking its language towards the fall and setting up to act by the end of the year. 

USD/JPY bids arrived early in European trade as the yen longs get squeezed in the absence of fresh concerns in markets and within an improved risk environment. However, there was a dip to 106.88 before a pick up to 107.27 the high. The dollar sell-off took the pair down to 106.45 for the NY close after that minor intraday fresh high on 107. 

As for the antipodeans, NZD/USD was extending the upside recovery and crossed the descending trendline on the 0.73 handle, poised for higher levels still and was the best performer overnight. The Aussie elicited support pre-0.7856 after retreating from 0.7885 in London in a choppy European session and opened the US shift at 0.7875 where bulls bought the early dip on the back of a decline in US yields and that sell-off in the greenback taking the pair as high as 0.7898 off the bat. However, AUD/JPY was a weight and the pair closed back around 0.7875.

 Key notes from US session:

Funda wrap: White House's revolving door sends dollar and Tillerson packing

Key events ahead:

Analysts at Westpac offered their outlook for the forthcoming key events as follows: "China releases combined Jan-Feb data on industrial production, retail sales and investment at 1pm Syd. Industrial production will be watched most closely and occasionally has a small impact on AUD.

The US data highlight is February retail sales. January’s report was unexpectedly weak (-0.3% overall), with December revised lower, but this followed a strong few months. Consensus this month is 0.3% m/m overall, 0.4% for the “control group” which excludes food, energy and building materials."

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD remains pressured after US data misses estimates

EUR/USD is trading closer to 1.1750, paring its recovery from earlier in the day as the safe-haven dollar is bid. US Consumer Sentiment missed estimates with 72 points in September. The financial woes of China's Evergrande are weighing on sentiment.

EUR/USD News

GBP/USD trades under 1.38 amid on UK data, dollar strength

GBP/USD is on the back foot, trading under 1.38 after UK Retail Sales figures disappointed with -0.9% in August, worse than expected. Brexit uncertainty and dollar demand weighed on the pair earlier. 

GBP/USD News

XAU/USD surrenders intraday gains, drops closer to $1,750 level

Gold struggled to preserve its intraday gains and dropped to the lower end of the daily trading range during the early North American session. 

Gold News

Experts say Ripple will win SEC lawsuit, which might propel XRP to new all-time highs

The latest development in the ongoing SEC vs. Ripple lawsuit is that documents are classified as privileged and blocked for public viewing. Though institutional investors are yet to take big bets on the altcoin in 2021, retail investors are actively trading in XRP.

Read more

US Michigan Consumer Sentiment Preview: Markets will have to look hard for positive signs

Consumer outlook expected to rebound to 72.2 in September. August’s 70.2 was the lowest since December 2011. Inflation and Delta variant wearing on US optimism. Markets face negative dollar risk from fading consumer optimism.

Read more

Forex MAJORS

Cryptocurrencies

Signatures