Dollar bulls were in a pretty good mood during the New York session on stronger hopes that tax reform could see more positive developments in the days ahead.
After all, the Senate just approved their version of the bill over the weekend and is set to start talks with the House this week.
Still, market watchers are keeping a wary eye on the ongoing investigation into Trump’s dealings with Russia as the Donald’s associates will testify this week.
- U.S. factory orders down 0.1% vs. projected 0.3% decline in Oct
- U.S. Sept factory orders upgraded from 1.4% to 1.7% gain
Tax progress lifts Wall Street
U.S. equity indices advanced to new highs as the tax bill cleared one hurdle after another in the past few days. Traders are now looking ahead to talks between the House and Senate in merging their respective versions.
However, the rallies were capped later in the trading day as the I-word floated about when Donald Trump Jr. and former Trump business associate Felix Slater are due to testify to the U.S. House of Representatives Intelligence Committee.
- Dow 30 index is up 58.46 points to 24,290.05 (+0.24%)
- S&P 500 index is down 2.78 points to 2,639.44 (-0.11%)
- Nasdaq is down 72.22 points to 6,775.37 (-1.05%)
Nonetheless, U.S. bond yields remained in the green for the rest of the day.
- U.S. 30-year yield is up to 2.772% (+0.52%)
- U.S. 10-year yield is up to 2.381% (+0.77%)
- U.S. 5-year yield is up to 2.148% (+1.41%)
Stronger than expected U.S. factory orders
The only piece of data from Uncle Sam printed better than expected results. Even though factory orders were down 0.1% in October, this was a smaller decline compared to the estimated 0.3% drop.To top it off, the previous month’s reading enjoyed an upgrade from 1.4% to 1.7%. As it turned out, the October dip was merely due to weaker demand for both civilian and defense aircraft.
Excluding aircraft, orders for non-defense capital goods were actually 0.3% higher in October, signaling a pickup in business spending plans. Shipments of core capital goods were up 1.1% in the same month, with analysts attributing these gains to higher business spending in anticipation of tax cuts.
Another attempt at German coalition
It looks like German Chancellor Angela Merkel is still struggling to establish a coalition with the Social Democrats (SPD) party, keeping the government in limbo possibly until next weekend.
According to SPD leader Martin Schulz, their political party is willing to start talks only if members give him the go signal. However, the issue of immigration has yet to be settled, and this was actually one of the reasons why Merkel’s earlier attempt at a three-way coalition with the Greens and Free Democrats failed.
It didn’t help that Merkel’s own Christian Social Union allies named right-winger Markus Soeder as candidate for state premiership. Now Soeder isn’t exactly a fan of the Chancellor’s way of dealing with the Greek debt crisis, which suggests that there could be tension within Merkel’s own ranks.
Major Market Mover(s):
‘Twas a rally-and-reverse kind of day for the Greenback as it initially went on a good run boosted by tax reform hopes and positive data before retreating later in the day.
USD/JPY turned upon hitting a high of 113.09 then fell back to 112.45, EUR/USD bounced off a low of 1.1829 then climbed to 1.1870, and USD/CHF pulled up to .9867 then fell back to .9841.
The franc continued to bleed against most of its peers, carrying on with its decline from the previous session.
NZD/CHF climbed to a high of .6761, CAD/CHF is up to .7775, AUD/CHF rallied to .7521, and EUR/CHF broke out of its consolidation to reach a high of 1.1688.
Watch Out For:
- 12:15 am GMT: RBNZ head Spencer’s testimony
- 12:30 am GMT: Australia’s current account balance (8.8B AUD deficit expected)
- 12:30 am GMT: Australian retail sales (0.3% expected, 0.1% previous)
- 1:45 am GMT: Chinese Caixin services PMI (climb from 51.2 to 51.5 expected)
- 3:30 am GMT: RBA monetary policy statement (no change to 1.50% interest rate eyed)