US dollar fails to hold to gains on Obama’s last day

The US dollar turned to the downside during the last hours of the American session and erased gains. The decline took place as equity prices extended losses. The Dow Jones was falling 0.48% and the Nasdaq was down 0.35%. Gold prices rebounded during the last hours, climbing back above $1,205/oz while US bonds trimmed losses. 

The DXY, which gauges the US dollar against its main competitors, reached 101.68 earlier today, the highest level in a week, but then turned to the downside and near the end of the session it was falling toward 101.00. 

The index failed to break the relevant 101.65/70 resistance area. To the downside support could be seen at 100.90 (daily low), followed by 100.60 and 100.20 (weekly low). 

Data and sentiment

Economic data from the US included today, the Philly Fed that rose to 23.6 against expectations of a 15.3 reading; Housing starts climbed to 1,226K and initial jobless claims dropped more than expected to 234K (the 4-week moving average of claims hit the lowest since 1973). Economic numbers could be offset over the next weeks by the announcement of Trump policies. 

“Markets are awaiting Trump’s inauguration and speech. USD and US yields display solid support after Philly Fed’s business survey affirmed the broad strength in yesterday’s Fed’s Beige Book. Draghi stated that ECB will look through near-term inflation pick-ups whilst UK’s May made another positive speech in Davos, stressing UK’s desire to be a global trading partner and offering conciliatory comments to EU. Stocks drifted slightly lower on the day”, wrote analysts from Westpac.