Dollar Falls Strongly Against Currencies and Gold Raised To 1296 Level
The Japanese Yen and Emerging Market currencies rose the US Ten-year bond yield edged lower on Friday. Global risk sentiment turned soft. The Dollar Index (USD/DXY), a measure of the Greenback against six Rivals was down 0.26% (93.666). For the week, the Index was down 0.8%. A report that Special Counsel Robert Mueller’s team had subpoenaed President Trump’s election 2016 campaign for documents pressured the Dollar. Both the Australian and New Zealand Dollar’s ended lower. Both antipodeans had sizeable losses against the Greenback for the week as their yield advantage over the Dollar continued to narrow to the smallest in years.
In data released Friday, New Zealand’s PPI Input and Output rose to a less than forecast 1.0% from 1.2% and 1.4% respectively.
The Euro Zone’s Current Account Surplus rose to +EUR 37.8 billion from a previously upward adjusted +EUR 34.5 billion.
Canada’s October Headline CPI read at 0.1%, the same as analysts had forecast. Core CPI rose 0.3%, up from the previous reading of 0.2%.
US October Building Permits rose to 1.30 million units against a median forecast of 1.25 million units. Housing Starts in October rose 1.29 million units, a one year high.
Wall Street stocks slipped, falling for the second week. The Dow ended down 0.43% at 23,344.5 (23,465.5 Friday).
The yield on the US Ten Year Treasury fell to 2.34% from 2.36%. The US Two year bond yield rose one basis point to 1.72%, narrowing the spread with the Ten years to the tightest in a decade. Germany’s Ten Year Bund was yielding 0.36% (0.37% Friday). The yield on the Australian Ten year note was down to 2.57% (2.58% Friday).
USD/DXY – slips to 93.666 from 93.926 Friday, down 0.26%
EUR/USD – slight rise to 1.1788 (1.1767 Friday)
USD/JPY – falls 0.88 % to 112.17 at the NY close from 113.00 Friday.
GBP/USD – mild gains to 1.3215 (1.3183 Friday).
AUD/USD – ends down at 0.7565 from 0.7591 Friday, it’s the lowest close since late June this year.
USD/SGD – lower to 1.3555 (1.3565 Friday). Emerging market currencies rallied against the US Dollar. The USD/ZAR slumped 1.3% to 13.9620 (14.1626 Friday).
Outlook: The Mueller probe into President Trump’s 2016 campaign overshadowed the passing of the previous day’s passing by Congress of the tax bill. This political event will pressure the Dollar with little economic data out today. The US Thanksgiving Holiday weekend starts on Thursday and will make for a short, and likely volatile trading week.
Events and economic data due today:
Japan October Trade Balance (Surplus): (GMT 11.50 pm, Nov 19/Local Time 10.50 am, Nov 20) forecast: Surplus of JPY 330 billion from previous +JPY 667.7 billion
Germany October PPI (GMT 7 am, Nov 20/Local Time 5 pm, Nov 20): forecast: 0.2% from 0.3%
Germany Bundesbank Report (GMT 11 am, Nov 20/Local Time 10 pm, Nov 20)
ECB President Mario Draghi is due to testify on the Euro Zone economy and monetary policy before the European Parliament Economic and Monetary Affairs Committee in Brussels, Belgium (GMT 2 pm, Nov 20/Local Time 1 am, Nov 21)
Trading View: Renewed political uncertainty is likely to weigh on the Dollar with little in the way of economic data today. Risk sentiment remains on the weak side and may drag the Greenback lower. This pullback though is corrective in nature. The latest CFTC/Reuters report (week ended Nov 14) saw mixed results for the Dollar against its main Rivals.
EUR/USD – finished just under 1.1800 at 1.1789 in New York Friday. The Euro traded to an overnight high of 1.18219. Immediate resistance lies at 1.1810 and 1.1820. Immediate support can be found at 1.1770 (the overnight low was 1.1765). ECB President Mario Draghi speaks today on the Euro Zone economy and monetary policy before the European Parliament in Brussels. So far Draghi has been relatively upbeat on the economy while maintaining that the ECB’s current accommodative monetary policy stance is appropriate. Likely range today 1.1770-1.1830.