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The dollar was back on the losers’ table even as its other lower-yielding peers were able to benefit from risk-off flows. What’s up with that?!

  • U.S. building permits down from 1.27M to 1.23M vs. 1.27M forecast
  • U.S. housing starts fell from 1.20M to 1.17M vs. 1.26M consensus
  • U.S. industrial production increased by 1.0% vs. projected 0.4% uptick
  • U.S. capacity utilization rose from 76.1% to 76.7% vs. 76.3% forecast
  • New Zealand PPI input q/q up 0.8% vs. 0.7% consensus
  • New Zealand PPI output q/q up 1.4% vs. 1.1% forecast
  • New Zealand GDT auction yielded 3.2% gain in dairy prices

Major Events:

The latest on “Trumpgate”

Political headlines are back in the forex spotlight as the latest developments in Washington have been influencing dollar price action.

U.S. President Trump is in the hot seat for allegedly sharing classified information with Russia, and the White House is saying that the intelligence shared came from Israel. Naturally, the Donald won’t take this sitting down and responded to criticism through his favorite means: Twitter.

“As President I wanted to share with Russia (at an openly scheduled W.H. meeting) which I have the absolute right to do, facts pertaining to terrorism and airline flight safety,” @realDonaldTrump tweeted. “Humanitarian reasons, plus I want Russia to greatly step up their fight against ISIS & terrorism.”

Trump also grabbed the opportunity to throw some shade on Comey, suggesting that the recently-fired FBI director has failed in his mission to identify where the leaks are coming from. Even so, market watchers appear to be less confident about the Trump administration’s ability to push forward with their reform agenda while national security is in question.

In other news, House of Cards will be back in a couple of weeks so Trump can be able to take some notes from the Underwoods.

  • Dow 30 index is down 2.19 points (-0.01%)
  • S&P 500 index fell 1.65 points (-0.07%)
  • Nasdaq advanced 20.20 points (+0.33%)

Mixed U.S. economic data

Uncle Sam’s numbers came in a mix of red and green, as housing data fell short of estimates while industrial production came out strong.

Building permits dropped from 1.27 million to 1.23 million in April instead of holding steady while housing starts slid from 1.20 million to 1.17 million instead of improving to 1.26 million. Components of the report suggested that this unexpected slowdown in residential construction activity could dampen growth for this quarter, casting some doubt on the Fed’s rate hike timeline once more.

On a less downbeat note, other indicators of housing demand continued to stay afloat, particularly when it comes to homebuilder confidence. Analysts pointed out that one bad data point doesn’t make a trend and that the pullback may simply be due to one-off factors like unusual weather conditions and shortages of ready-to-build lots.

Meanwhile, industrial production ticked 1.0% higher versus the projected 0.4% uptick while capacity utilization improved from 76.1% to 76.7%, outpacing the consensus at 76.3%. This is its fastest pace of growth in industrial production in more than three years, signaling that businesses remain confident that demand will pick up at some point.

Major Market Movers:

CHF & JPY

The franc was nearly nonstop in its advance against its rivals, taking the bigger share of safe-haven gains versus the dollar. The yen was also able to squeeze out some wins as well.

USD/CHF plummeted from .9915 to a low of .9839, GBP/CHF crashed from 1.2774 to 1.2714, CAD/CHF is down from a high of .7276 to a low of .7227, and AUD/CHF is breaking below .7300.

USD/JPY slid from 113.56 to a low of 112.62, EUR/JPY tumbled from a high of 125.81 to a low of 124.97, GBP/JPY slipped to 145.50, and AUD/JPY is down to 83.55.

Watch Out For:

  • 12:50 am GMT: Japanese core machinery orders (2.6% expected, 1.5% previous)
  • 1:30 am GMT: Australia Westpac consumer sentiment (-0.7% previous)
  • 2:30 am GMT: Australia wage price index q/q (0.5% expected, 0.5% previous)
  • 5:30 am GMT: Japan’s revised industrial production (preliminary read at -2.1%)