Traders showed no love for the Greenback once more as the looming deadline of the government funding bill increases the risk of a shutdown. U.S. economic data also turned out mostly weaker than expected.
Meanwhile, the franc held on to its top spot for the session, taking advantage of dollar weakness and risk-off flows.
- U.S. building permits unchanged at 1.30M vs. 1.29M consensus
- U.S. housing starts slipped from 1.30M to 1.19M vs. 1.28M consensus
- Philly Fed index fell from 26.2 to 22.2 vs. 24.9 forecast
- U.S. initial jobless claims down from 261K vs. 220K vs. 250K estimate
- U.S. EIA crude oil inventories down by 6.9M barrels vs. 1.4M forecast
- Canada’s ADP non-farm employment change down by 7.1K
- New Zealand Business NZ manufacturing index slipped from 57.7 to 51.2
Risk of U.S. gov’t shutdown
With members of Congress still scrambling to get the funding bill passed before the end of the week, some federal agencies started bracing themselves for a potential government shutdown.
Note that the government is already on its third temporary funding extension since October last year. Word on Capitol Hill is that Republicans are still pushing for a short-term funding extension, but it’s unclear if Senate could follow suit.
Failing to do so would risk putting non-essential government workers on furlough while essential workers, particularly those in public safety, would carry on with their jobs. Apart from that, the SEC and CFTC could also put operations on pause as most of their budget is set by Congress.
These jitters, along with a few earnings misses, put U.S. equity indices in the red:
- Dow 30 index is down 97.84 points to 26,017.81 (-0.37%)
- S&P 500 index is down 4.53 points to 2,798.03 (-0.16%)
- Nasdaq is down 2.23 points to 7,296.05 (-0.03%)
U.S. bond yields stayed supported and the 10-year yield hit its highest level in 10 months.
Mostly downbeat U.S. reports
Medium-tier data failed to impress, with only the initial jobless claims report printing stronger than expected results. The figure fell from 261K to 220K in the previous week, lower than the estimated fall to 250K.
Building permits held steady at 1.30 million instead of dipping to 1.29 million but housing starts disappointed with a slump from 1.30 million to 1.19 million. This suggested that the sharp increase mostly on weather-related effects for the earlier period couldn’t be sustained.
The Philly Fed index also turned out weaker than expected as it slumped from 26.2 to 22.2 versus the estimated fall to 24.9. Components of the report revealed that general activity, new orders, and employment fell from December levels while firms reported an increase in both input prices and prices for their own products.
Major Market Mover(s):
The dollar returned to its seat on the losers’ table as the prospect of a government shutdown outweighed hawkish remarks from FOMC member Mester.
USD/JPY tumbled from 111.32 to a low of 110.69, USD/CHF is down from .9616 to .9575, EUR/USD advanced from 1.2215 to a high of 1.2265, and GBP/USD is up to the 1.3900 handle.
The Loonie also strengthened during the U.S. session despite the weak Canadian ADP jobs report. The larger than expected draw in EIA stockpiles helped crude oil stay afloat, along with the positively-correlated currency.
USD/CAD is down from 1.2487 to a low of 1.2414, CAD/JPY recovered from 88.87 to 89.56, EUR/CAD fell back to 1.5200, and GBP/CAD is down to 1.7240.