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The dollar was off to a topsy-turvy start on Monday then eventually ended mixed against its rivals. There wasn’t much on the data docket, so traders paid closer attention to speeches from central bankers instead.

  • U.S. new home sales up from 645K to 685K vs. 627K forecast
  • FOMC member Kashkari: No reason to ‘tap the brakes’ on the economy
  • Incoming Fed head Powell: Expects interest rates to rise ‘somewhat further’
  • Keystone Pipeline to restart at reduced pressure this week

Major Events/Reports

Testimonies from Kashkari and Powell

A couple of FOMC members, namely Neel “The Dove” Kashkari and incoming head honcho Jerome Powell, shared their thoughts on inflation and monetary policy.

Kashkari’s remarks weren’t particularly surprising since he has been warning about weak inflation every time he gets the chance. In his speech, he reiterated that he would keep voting against rate hikes until inflation hits the 2% target. Kashkari said:

“Because inflation is low, I am seeing no reason to tap the brakes on the economy. My perspective is let’s allow the job marker to continue to strengthen, allow more Americans to go back to work, allow wages to strengthen, and then if we start to see inflation creep back up to our 2% target, we can tap the brakes then.”

Powell mostly focused on fiscal policy remarks in his upcoming Senate confirmation speech, the text of which was released by the central bank a day ahead. When it came to monetary policy, he noted:

“We expect interest rates to rise somewhat further and the size of our balance sheet to gradually shrink.”

TransCanada to resume Keystone Pipeline operations

After a shutdown in the previous weeks owing to a spill that leaked 5,000 barrels of crude oil in South Dakota, the Keystone Pipeline is set to resume operations at lower pressure on Tuesday.

This export route from Alberta to U.S. refineries carries roughly 590,000 barrels of oil per day, which suggests that supply will tick higher in the coming days. This was enough to push crude oil back down from its recent surge:

  • WTI crude oil dipped to $57.85 per barrel (-0.45%)
  • Brent crude oil is flat at $63.35 per barrel (0.00%)

For now, traders are still counting on small draws in stockpiles to be reported by the API and EIA this week while also awaiting the OPEC meeting later on.

Eyes on U.S. tax plan

With lawmakers back to their desks after a relaxing Thanksgiving break, market watchers seem more hopeful that tax reform will see better progress in the days ahead.

As the Donald tweeted:

This comes after a brief meeting with Senate Republicans and ahead of a vote that could take place on Thursday at the earliest.

Major Market Mover(s):

USD

The Greenback was off to a rough start during the U.S. session but was able to catch a few gains on Trump’s tax-related tweet and upbeat new home sales data.

EUR/USD turned from a high of 1.1962 to a low of 1.1891, GBP/USD retreated from 1.3383 to a low of 1.3309, AUD/USD is down to .7610, but USD/JPY continued its slide to the 111.00 handle.

JPY

The yen was the top performer for the session as it held on to its gains versus the higher-yielding currencies.

EUR/JPY resumed its slide from 132.77 to 132.27, GBP/JPY tumbled to the 148.00 handle, AUD/JPY is down to 84.50, and CAD/JPY retreated to 87.10.

CAD

Prospects of higher oil supply in the U.S. weighed on crude oil prices and dragged the correlated Loonie along with it.

USD/CAD popped up from a low of 1.2681 to a high of 1.2771, EUR/CAD is up to 1.5190, GBP/CAD is currently testing the 1.7000 handle, and AUD/CAD reached a high of .9712.

Watch Out For:

  • 12:00 am GMT: FOMC member Dudley’s testimony