Article Highlights

  • Canadian wholesale sales up 0.2% vs. 0.3% forecast in Nov
  • Chinese CB leading index up 0.8% vs. 1.3% previous
  • Euro zone consumer confidence index unchanged at -5 as expected
  • Fed official Lacker: At risk of “getting behind the curve” if rates aren’t hiked faster
  • U.S. Treasury Secretary Mnuchin: Excessively strong USD may be negative in short term
  • Mnuchin: Gov’t will address issue of Chinese FX manipulation
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No data? No problem! Major pairs were still able to enjoy a bit of action during the New York session but unfortunately for the dollar, Treasury Secretary Mnuchin was a downer.

Major Events:

Treasury Secretary nominee’s remarks – Trump’s pick for Treasury Secretary is former Goldman Sachs banker Steven Mnuchin whose appointment is awaiting the confirmation vote by the Senate. Even though he hasn’t officially taken office yet, his comments already had a strong impact on the dollar as he said that an excessively strong currency may be negative in the short term.

“A stronger dollar increases U.S. dollar purchasing power,” Mnuchin wrote in response to U.S. senators’ questions for his confirmation hearing. “To the extent the dollar gains strength relative to other currencies, assets priced in those other currencies would become cheaper on a dollar basis.”

Mnuchin also mentioned that they plan on addressing the issue of Chinese FX manipulation, asserting that this is an unfair practice and that they plan on working with the IMF, G7, and G20 on currency issues. “I will ensure that we defend American jobs by combating currency devaluation through legislative processes established by Congress,” he said, staying in tune with Trump’s “America First” theme during his inaugural address.

The Donald’s first moves – All eyes and ears are on freshly-inaugurated U.S. President Trump’s first executive actions, which involved withdrawing from the Trans-Pacific Partnership and signing an order to freeze federal hiring.

Trump also reiterated his plans to implement tax reform and bring jobs back to America while imposing a “very major border tax.” He also announced that he would reinstated the Mexico City rule banning U.S. funds from supporting overseas abortion. In response, Mexican President Enrique Nieto said that they will be “obliged to take steps to defend their interests given the new vision in the U.S.” Press Secretary Spicer himself hinted that there are likely to be more moves like this that would spur volatility in the markets in the coming days. Yikes.

Major Market Movers:

USD – The Greenback struggled to get back on its feet but its knees eventually buckled when Trump reiterated his protectionist plans and Mnuchin warned against excessive USD strength.

EUR/USD edged up from a low of 1.0705 to a high of 1.0773, GBP/USD continued to advance from 1.2462 to 1.2545, USD/JPY tumbled from the 114.00 handle to a low of 112.53, and AUD/USD rose from .7558 to test the .7600 mark.

Watch Out For:

  • 12:30 am GMT: Japanese flash manufacturing PMI (52.3 expected, 52.4 previous)

See also:

London Session Recap

Asian Session Recap

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