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The dollar was king of pips during the U.S. session, as comments from the U.S. Treasury Secretary restored some confidence in the markets.

  • US NY manufacturing index drops from 16.4 to 5.2 in April
  • US NAHB housing market index dips from 71 to 68 in April
  • US TIC long-term purchases clocks in at $53.4B vs. $12.4B expected, $5.9B previous

Major Events:

Weak U.S. data –Uncle Sam printed another batch of weak economic data yesterday. New York’s manufacturing index, for one, dropped a whopping 11 points to 5.2 in April.

Apparently, business activity grew at a more subdued pace with new orders retreating by 14 points to 7.0 in April while shipments, unfilled orders, and inventories indices also point to more moderate paces. The silver lining is in the employment index, which climbed by five points to its highest in over two years.

Meanwhile, a housing market report fell three points to 68 in April after an unusually high March reading. Still, NAHB Chairman Granger MacDonald assures that “builder confidence is on very firm ground” despite dips in all three housing market index components.

Last but not the least is the TIC long-term securities transactions report, which came in at $53.4B when analysts were only expecting a climb to $12.4B. For newbies out there, you should know that a positive reading means that more foreigners have purchased US stocks or bonds over the last month.

Mnuchin’s comments – U.S. Treasury Secretary Steven Mnuchin kept the party alive during the U.S. session after a Financial Times article published some of his interview comments.

The biggest takeaways from the article is that (1) Mnuchin thinks a strong dollar is good in the long run and (2) he still expects a tax reform some time this year.

Mnuchin backed Trump’s comments about the dollar “getting too strong,” saying that he was “factually correct” as the dollar’s strength “certain issues that hurt our exports” in the short-term.

However, Mnuchin believes that “As the world’s currency, the primary reserve currency, I think that over long periods of time the strength of the dollar is a good thing,” because “It’s a function of the confidence and the strength of the US economy.

Mnuchin also tempered expectations for a tax reform, saying that expecting one before August is “highly aggressive to not realistic at this point.”

He also admitted that “it started as [an] aggressive timeline” and that “it is probably delayed a bit because of the healthcare.” Despite that, the Treasury Secretary still expects a tax system reform in 2017.

Mnuchin’s comments were a welcome sight to the U.S. markets, which was hit by a weak U.S. retail sales report and Trump’s jawboning last week.

  • The DJIA rose 0.9% to 20,636.92
  • S&P 500 gained 0.74% to 2,349.01, and
  • NASDAQ popped up by 0.9% to 5,856.79.

The U.S. 10-year Treasury yields also saw a 0.8% boost during the session.

Major Market Movers:

USD – The Greenback was king of pips during the U.S. session after Mnuchin all but gave a go signal to push the dollar higher…in the long-term.

USD/JPY jumped by 43 pips (+0.40%) to 108.93, EUR/USD slipped from its 1.0670 session high to trade at 1.0641, GBP/USD U-turned from 1.2596 to trade at 1.2562, and USD/CHF rose by 11 pips (-0.11%) to 1.0045 after dipping to 1.0009.

Watch Out For:

  • 1:30 am GMT: RBA’s policy meeting minutes

See also:

London Session Recap
Asian Session Recap

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