Article Highlights

  • U.S. flash manufacturing PMI up from 54.3 to 55.1 vs. 54.6 forecast
  • U.S. existing home sales down from 5.65M to 5.49M vs. 5.54M estimate
  • Richmond manufacturing index up from 8 to 12 vs. consensus at 7
  • Trump signed executive order to build Dakota Access and Keystone XL pipelines
  • S&P 500 and Nasdaq hit record highs on rallies in financials and tech
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The Greenback scored a positive day after Trump’s first couple of days in office went by without a glitch and U.S. equity indices soared to record highs.

Major Events:

Mostly upbeat U.S. data – Economic reports from Uncle Sam came in mostly in the green, except for the existing home sales report which showed a sharper than expected fall from 5.65 million to 5.49 million versus the projected 5.54 million figure. As it turns out, the dip was due to tighter inventory and higher prices.

The flash manufacturing PMI for January rose from 54.3 to 55.1 to show a much faster than expected pace of growth compared to the 54.6 estimate. Components of the report revealed that the gains were spurred mostly by a strong pickup in new orders, followed by output and purchasing activity.

Businesses also increased payrolls to keep up with higher production. The Richmond manufacturing index also showed a steeper than expected climb from 8 to 12, outpacing the consensus at 7.

The S&P 500 index was up 0.66% to 2,280.07, the DJIA advanced 0.57% to 19,912.71, and the Nasdaq climbed 0.86% to 5,600.96.

This was spurred by a broad rally in financial and tech stocks as investors anticipate an upbeat earnings season and a sweep by La La Land in the Oscars.

More on Trump – So far so good for new U.S. President Donald Trump, as his next executive order gave the go signal for building the Dakota Access and Keystone XL oil pipelines. The Donald has told reporters that this would be subject to the condition that the builders use American steel, although this wasn’t explicitly stated in the document.

These projects are particularly controversial because the Obama administration shelved the idea due to environmental concerns.

Several native American groups had been protesting the Dakota Access pipeline since it would damage their water supply and run through sacred burial sites while the Keystone XL pipeline was found to be greenhouse gas intensive by the State Department.

But once the pipelines are constructed, these would carry oil from shale reserves in North Dakota to refineries in Illinois.

Meanwhile, Keystone would bring 800,000 barrels per day from the Canadian oil sands to the Gulf Coast. Crude oil rallied upon hearing the news, with WTI crude oil up to $53.10/barrel and Brent crude oil climbing to $55.20/barrel.

Major Market Movers:

CAD

The Loonie kicked back to high gear after Trump gave the green light for the Keystone XL pipeline, as this could spur demand for Canada’s energy resources.

USD/CAD fell from 1.3288 to a low of 1.3105, CAD/JPY popped up from 85.17 to a high of 86.62, EUR/CAD slipped from 1.4275 to 1.4112, and GBP/CAD retreated below the 1.6500 handle.

Watch Out For:

  • 12:30 am GMT: Australian CPI q/q (0.7% expected, 0.7% previous)
  • 2:00 am GMT: New Zealand credit card spending