Dollar weakness was already in play earlier in the day after Treasury Secretary Mnuchin said that a lower currency is good for trade, and sellers showed no signs of stopping as more geopolitical concerns emerged.
On the flip side, the pound held on to its top spot while the euro trailed behind on ECB statement expectations for today.
- U.S. flash manufacturing PMI up from 55.1 to 55.5 in January
- U.S. flash services PMI down from 53.7 to 53.3 vs. 54.5 forecast
- U.S. existing home sales slid from 5.78M to 5.57M vs. 5.72M consensus
- U.S. EIA crude oil inventories down by 1.1M barrels vs. 1.0M forecast
- New Zealand Q4 2017 CPI down from 0.5% to 0.1% vs. 0.4% estimate
Mnuchin brings all the bears to the yard
During his press time in Davos in the previous trading session, U.S. Treasury Secretary Steven Mnuchin was in a jawboning mood when he said that a weaker dollar is good for U.S. when it comes to trade.
This led the scrilla to break through several technical levels before the opening bell rang, and this bearish momentum carried on for the rest of the session. More analysts chimed in to say that the dollar has been overvalued to begin with and that it could continue to stay under pressure as other central banks join the tightening bandwagon.
Also at Davos, Commerce Secretary Wilbur Ross remarked that the U.S. government is looking into taking action over China’s infringements of intellectual property. This sparked fears of worsening trade tensions, especially since Trump is scheduled to speak in the same summit later today.
A couple of U.S. equity indices closed in the red, but bond yields ticked higher:
- Dow 30 index is up 41.31 points to 26,252.12 (+0.16%)
- S&P 500 index is down 1.59 points to 2,837.54 (-0.06%)
- Nasdaq is down 45.23 points to 7,415.0.6 (-0.61%)
Mostly weak U.S. data
The dollar barely had a chance to lick its wounds when economic reports came in mostly in the red. The only improvement was from the flash manufacturing PMI for January, which rose from 55.1 to 55.5 versus the consensus at 55.2 to indicate a faster pace of industry growth.The services PMI, on the other hand, slipped from an upgraded 53.7 reading to 53.3 instead of improving to 54.5. Components of the Markit report revealed that weaker business activity growth weighed on the services sector but that new work and input costs were on the rise.
Existing home sales also turned out to be a disappointment as the reading tumbled from a downgraded 5.78 million to 5.57 million, lower than the consensus at 5.72 million. This capped off three consecutive monthly gains, and analysts pointed to inventory constraints as the main factor for the drop.
Major Market Mover(s):
The Greenback was still down in the dumps as more bears caught up to the action from the previous trading sessions and found more reason to short the currency.
USD/JPY continued to tumble to a low of 108.97, USD/CHF fell from .9508 to a low of .9426 before consolidating, USD/CAD crashed below 1.2400 to a low of 1.2322, and NZD/USD is up to a high of .7431 before tumbling on the bleak CPI result.
EUR & GBP
This European tandem dominated for the most part of the session, with the pound enjoying positive momentum after the U.K. jobs release and the euro looking forward to an upbeat ECB decision.
EUR/USD rose to a high of 1.2416, EUR/JPY bounced off a low of 135.08 to a high of 135.72, GBP/USD is up to a high of 1.4263, and EUR/GBP is down to the .8700 levels.
Watch Out For:
- No major reports scheduled during the Asian session