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Down but not out! The Greenback staged quite the comeback in the early part of the New York session but had trouble holding on to most of its winnings.

U.S. equities, on the other hand, seemed poised for another day in the red before getting back on their feet and landing in positive territory before the closing bell tolled.

  • Canadian trade deficit widened from 2.7B CAD to 3.2B CAD vs. 2.3B CAD forecast
  • Canada’s Ivey PMI sank from 60.4 to 55.2 vs. 60.7 consensus
  • U.S. trade deficit grew from $50.4B to $53.1B vs. estimated $52.1B shortfall
  • U.S. JOLTS job openings down from 5.98M to 5.81M vs. 5.95M forecast
  • U.S. IBD/TIPP economic optimism index up from 55.1 to 56.7
  • Fed official Bullard: Link between job and inflation has broken down
  • New Zealand GDT auction yielded 5.9% jump in dairy prices
  • New Zealand employment change up 0.5% in Q4 2017 vs. 0.4% consensus
  • New Zealand unemployment rate improved from 4.6% to 4.5% vs. 4.7% estimate
  • New Zealand labor cost index up 0.4% vs. 0.5% forecast, 0.7% previous

Major Events/Reports

More volatility in Wall Street

It was another topsy-turvy day in financial markets, but the ending turned out to be a happier one for equities this time. Indices looked poised for another day of losses before clawing their way back up.

  • Dow 30 index ended up 567.02 points to 24,912.77 (+2.33%)
  • S&P 500 index closed 46.20 points up to 2,695.14 (+1.74%)
  • Nasdaq was up 148.36 points to 7,115.88 (+2.13%)

The bulls won over the bears in the latest round, with analysts remarking investors remain optimistic due to strong U.S. earnings reports and the potential impact of the government’s tax reform program. Apart from that, others also believe that several market participants bought on dips after the previous day’s selloff.

Risk appetite appears to have popped its head back in the markets then, causing gold to return its recent gains and WTI crude oil to recover.

  • Gold retreated to $1,325.90 per troy ounce
  • WTI crude oil advanced to $63.58 per barrel
  • Brent crude oil was still down to $67.22 per barrel

Of course there are still jitters about another potential government shutdown as the deadline looms yet again for Congress to vote on its funding bill.

Not-so-good data from Canada

It wasn’t all rainbows and butterflies from Canada, though, as its trade balance and Ivey PMI readings disappointed.

The trade deficit widened from 2.7 billion CAD to 3.2 billion CAD instead of narrowing to the estimated 2.3 billion CAD shortfall as the 1.5% gain in imports far outpaced the 0.6% increase in exports.

Underlying data showed that both components were buoyed by higher energy prices. Import volumes rose 1.0% but export volumes were mostly unchanged.

Meanwhile, the Ivey PMI plummeted from 60.4 to 55.2 instead of rising to the 60.7 consensus. This reflects a much slower pace of industry growth than expected. As it turned out, the prices component ticked higher but employment and deliveries were lower.

Positive data from New Zealand

Before the U.S. session came to a close, the Kiwi drew even more support from a bunch of mostly stronger than expected figures.

First off, the Global Dairy Trade auction yielded a 5.9% gain in dairy prices, stronger than the previous 4.9% increase and its third consecutive gain so far this year.

Next up, the quarterly jobs report also churned out positive results, with employment change rising by 0.5% in Q4 2017 versus the estimate of a 0.4% uptick. The unemployment rate improved from 4.6% to 4.5% in the same period instead of rising to the estimated 4.7% level.

Components of the report indicated that the labor force grew by 8,000 folks or 0.3% which makes it understandable why participation ticked 0.1% lower to 71%. Still, the employment rate held steady as hiring growth stayed in pace with the increase in the working-age population.

Major Market Mover(s):

USD

The Greenback seemed to have enough bullish momentum from its positive run earlier in the day but ran out of steam as the U.S. session rolled along.

USD/JPY climbed to a high of 109.65 then fell back to 109.12, EUR/USD dipped to a low of 1.2313 then bounced to the 1.2400 levels, GBP/USD found support at 1.3836 then recovered to 1.3980, and USD/CHF is back down to .9350.

NZD

The Kiwi got a double boost from risk-taking and upbeat economic updates, allowing it to stay in the lead at the end of the session.

NZD/USD climbed from a low of .7273 to a high of .7351, NZD/JPY is up from 79.79 to a high of 80.58, EUR/NZD retreated to 1.6900, and NZD/CAD is up to .9175.

Watch Out For:

  • 12:00 am GMT: Japanese average cash earnings y/y (0.6% expected, 0.9% previous)
  • 5:00 am GMT: Japanese leading indicators (dip from 108.3% to 108.1% expected)