- Dollar slump continues
- ECB minutes show divide among policy makers
- USD is vulnerable to ambiguous policies
- Euro-area economic prospects are rosy
Despite the US jobless claims significantly beating expectations in this morning’s release, the dollar failed to catch a break in the US session. The USD is down against all of its major trading partners, notable hitting resistance points against the euro and the Japanese yen.
The dollar continues to decline following Donald Trump’s press conference yesterday. Investors were looking for clarity on the President-elect’s plan to boost the economy through fiscal stimulus, clarity that was conspicuously absent. The dollar has surged since the election, a rally that seems more and more precarious as investors become impatient waiting for concrete detail on forthcoming plans from the new administration.
Industrial production in the euro Area was much stronger than expected in the most recent print for November with an upward revision for the previous month – a good sign for the Eurozone economy. The minutes from the European Central Bank showed a rare disagreements among policy makers last month. The ECB’s QE program is set to continue through December 2017, but the minutes revealed that the decision was far from unanimous. Some members of the Governing Council advocated a shorter, 6-month horizon, while others favored a lengthier extension of current bond-buying program “to shield the euro area recovery”. The argument for changing the present QE platform is a difficult one as inflation picks up across the euro area, but the trend is still burgeoning and untested. That being said, the dissenting members seem content to leave the current program as-is in the minutes, which showed the group’s consensus view that “the scenario of a gradual uptrend in inflation still relied, to a considerable degree, on accommodative monetary-policy support”. The ECB will hold its monetary policy meeting next week.
EURUSD: Continues to push session highs, look to Janet Yellen’s speech this evening and retail sales tomorrow.
GBPUSD: GBP catches a break from Brexit worries, recouping recent losses to gain over 0.6% against the dollar.
AUDUSD: The pair continues to push higher as commodity prices remain firm.
USDCAD: Bouncing from the daily lows, the USD remains broadly weak keeping pressure on this currency pair.