Article Highlights

  • U.S. core PCE price index up by 0.1% as expected
  • U.S. personal spending up by 0.5% vs. 0.4% forecast
  • U.S. personal income up by 0.3% vs. 0.4% forecast
  • U.S. pending home sales increased by 1.6% as expected
  • U.S. equities close in the red, S&P 500 index down 0.60%
  • New Zealand visitor arrivals sank by 1.3% in December
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The Greenback couldn’t make up its mind where to go, as it was pushed and pulled by sliding equities and bond yield speculations ahead of major central bank events.

Major Events:

Mixed U.S. economic data – Uncle Sam’s reports were a mix of red, black, and green on the economic calendar but equity indices closed the day in the red. The S&P 500 index was down 0.60%, the Nasdaq slid 0.83%, and the Dow closed 0.61% lower, leading some to worry that the “Trumphoria” is starting to fade.

The core PCE price index, which is said to be the Fed’s preferred inflation measure, showed a 0.1% uptick in price levels as expected. This is an improvement over the previous flat reading and brings the year-over-year figure up to 1.7% – just a few notches shy of the central bank’s 2% target.

Meanwhile, personal income ticked 0.3% higher, short of the projected 0.4% forecast, but personal spending outpaced expectations of a 0.4% gain with a 0.5% rise. This signals that consumers were in a pretty good spending mood during the December holiday season, buoyed by strong hiring and rising wages throughout the latter part of 2016.

Lastly, pending home sales printed a 1.6% gain as expected, chalking up a rebound from the earlier 2.5% decline and showing a bright spot in the housing sector unlike the earlier misses on existing and new home sales.

Trump watch: Regulation-ception – And now for the latest in the Oval… U.S. President Donald Trump has been talking about loosening up regulation in order to let businesses do their thing, and his latest executive order had a few pundits scratching their heads because he issued a regulation on how government agencies should regulate.

As it turns out, the Donald wants agencies to remove two existing regulations for every new one that is introduced and ensure that the incremental cost of new regulations should amount to zero. Also, “any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations” and that guidance on processes for standardizing the measurement of these costs should be established. I don’t know about you, but that sounds like more bureaucracy to me!

In the meantime, another day of protests on Trump’s immigration ban started to take its toll on U.S. assets as the backlash seems to be affecting global markets already, especially since the U.S. President is encountering some friction with the Justice Department and his GOP buddies.

Major Market Movers:

USD – The tossed and turned as traders tried to adjust their positions ahead of the BOJ statement and the FOMC decision this week. Take a look at Forex Gump’s central bank roundup to find out what might happen!

EUR/USD slumped to a low of 1.0620 then climbed back up to the 1.0700 area, GBP/USD slid to a low of 1.2465 then bounced to 1.2515, USD/JPY tumbled from 114.67 to a low of 113.45, and AUD/USD rebounded from .7525 to a high of .7568.

Watch Out For:

  • 11:30 pm GMT: Japanese household spending y/y (-0.8% expected, -1.5% previous)
  • 11:30 pm GMT: Japanese unemployment rate (3.1% expected, 3.1% previous)
  • 11:30 pm GMT: Japan’s preliminary industrial production m/m (0.4% expected, 1.5% previous)
  • Tenative: BOJ interest rate statement and press conference

See also:

London Session Recap

Asian Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!