So far, this year ain’t looking good for the dollar! The U.S. currency resumed its slump against its counterparts as risk appetite surged and medium-tier data fell short.
- Richmond manufacturing index fell from 20 to 14 vs. consensus at 19
- U.S. President Trump: NAFTA talks going “pretty well”
- Canadian chief negotiator Steve Verheul: “High hopes” of NAFTA progress
- API: Crude oil stockpiles up by 4.755M barrels
Risk appetite going strong
Risk-friendly vibes extended their stay in the markets throughout the U.S. session, allowing commodities and most equity indices to close in the green.
- S&P 500 is up 6.16 points to 2,839.13 (+0.22%)
- Nasdaq is up 52.26 points to 7,460.29 (+0.71%)
- Dow 30 index is down 3.79 points to 26,210.81 (-0.01%)
Gains on Wall Street were led by the tech sector, particularly shares of Alphabet, Netflix, Amazon, and Nvidia. Meanwhile, precious metals and energy commodities took advantage of dollar weakness.
- Gold is up $7.90 to $1341.51 per troy ounce (0.59%)
- WTI crude oil rose $0.90 to $64.47 per barrel (1.42%)
However, Black Crack gave up some of its gains towards the end of the session when the American Petroleum Institute reported a surprise build in stockpiles. This caps off consecutive weekly draws that previously eased oversupply fears.
Positive NAFTA updates
It seems that the Canadians are starting to win the Donald over in the sixth and final round of NAFTA negotiations as both sides signaled that talks are moving along fine.
Recall that Trump previously threatened to walk away from the negotiations if things don’t go his way (surprise, surprise) while other stakeholders namely Canada and Mexico appeared more open to hash things out.
This time, Canadian chief negotiator Steve Verheul told reporters that he had “high hopes” of progress, explaining:
“We have come to Montreal with a lot of new ideas, a lot of creative strategies to try to bridge some of the gaps in the negotiations.”
Sources said that the Canadian and Mexican governments appeared more willing to compromise with U.S. demands, particularly when it comes to the amount of autos that qualify for duty-free status in NAFTA. Mexico’s chief negotiator Ken Smith mentioned that progress might be made in other areas such as telecommunications, anti-corruption and food safety measures.
Major Market Mover(s):
The dollar was hit on all sides, forced to give up safe-haven flows to the Japanese yen and weighed down by risk-taking and downbeat data.
USD/JPY tumbled from 110.72 to a low of 110.06, EUR/USD advanced to a high of 1.2316, GBP/USD is testing the 1.4000 levels despite its weakness in the earlier session, and USD/CHF is down to a low of .9565.
The Loonie was able to take advantage of the slight pickup in oil prices and reports that the NAFTA talks are going better than they were before.
USD/CAD tumbled to a low of 1.2419, CAD/JPY bounced to a high of 88.84, EUR/CAD is back down to 1.5275, and GBP/CAD fell to the 1.7400 handle.
Watch Out For:
- 11:50 pm GMT: Japanese trade balance
- 12:30 am GMT: Japan’s flash manufacturing PMI
- 2:00 am GMT: New Zealand credit card spending y/y