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Dollar demand returned once the New York session rolled along, thanks to mostly upbeat U.S. data and positive remarks from FOMC members.

Cooling geopolitical risks also allowed U.S. equities and bond yields to stay in positive territory while crude oil and the correlated Loonie scored more wins.

  • Canada’s foreign securities purchases fell from 5.63B CAD to 3.96B CAD
  • Canadian manufacturing sales rose 1.9% vs. 1.0% forecast
  • U.S. building permits up from 1.32M to 1.35M in March
  • U.S. housing starts rose from an upgraded 1.30M to 1.32M
  • U.S. capacity utilization rate dipped from 78.1% to 78% vs. 77.9% forecast
  • U.S. industrial production increased 0.5% vs. 0.3% forecast, 1.1% previous
  • New Zealand GDT auction yielded 2.7% rebound in dairy prices

Major Events/Reports:

Strong medium-tier U.S. data

The latest batch of medium-tier U.S. reports suggested it’s all good in the ‘hood as most of the actual figures beat estimates.

First off, building permits advanced from 1.32 million to 1.35 million in March, outpacing the consensus at 1.33 million. Housing starts also impressed with a gain to 1.32 million from an upgraded 1.30 million figure.

Analysts remarked that this strong showing from the construction industry was likely spurred by tighter labor market conditions, improved consumer confidence, and better financial standing. However, it’s still worth noting that worker shortage and the rising cost of materials could keep a lid on further gains.

Next up, the industrial production report printed a 0.5% increase for March versus the estimated 0.3% uptick. This was slower than the earlier 1.1% gain, though. Meanwhile, capacity utilization dipped from 78.1% to 78%, just a notch above the 77.9% consensus.

The outlook for this particular sector remains positive as tax cuts are still expected to bolster business demand in the coming months. Then again, trade tensions with China could still pose risks for manufacturers.

Remarks from FOMC officials

Three members of the FOMC voting panel gave speeches over the past few hours, dropping more clues on how the next policy decision might turn out.

FOMC member John Williams simply reiterated that the central bank should keep on keepin’ on with its gradual rate hike path. In doing so, they could reduce the risk of seeing the U.S. economy overheat. He emphasized, after all, that the outlook remains positive and that inflation could reach the 2% target soon. Nothing new here!

FOMC member Randal Quarles didn’t really dwell too much on his economic outlook and policy bias as his speech mostly focused on financial regulation and the banking system.

FOMC member Raphael Bostic had some things to say about employment, citing that he hears about labor market shortages almost everywhere he goes.

This sentiment was echoed by Fed official Harker, who noted that the jobs market is becoming fairly tight. Fed official Evans, who is also not a member of the voting committee, mentioned that above-trend growth could also lead to inflation surpassing the central bank’s target. He also pointed out that consumer fundamentals are quite strong.

Risk-taking still supported?

Market participants are still in a cheery mood pushing U.S. equity indices up for yet another day.

  • Dow 30 index is up 213.59 points to 24,786.63 (+0.87%)
  • S&P 500 index is up 28.55 points to 2,706.39 (+1.07%)
  • Nasdaq is up 124.81 points to 7,281.10 (+1.74%)

Gold gave up some ground as safe-haven demand cooled, but crude oil retained its gains as the API reported lower stockpiles.

  • Gold is down to $1,347.20 per troy ounce
  • WTI crude oil is up to $66.84 per barrel
  • Brent crude oil is up to $71.83 per barrel

Major Market Mover(s):

USD

The dollar pocketed more gains throughout the session, boosted by upbeat data and optimistic remarks from a few FOMC members. It also helped that headlines no longer seemed to be focusing on trade war concerns or tensions in Syria.

EUR/USD retreated from a high of 1.2414 to a low of 1.2336, GBP/USD continued to slide to a low of 1.4282, USD/JPY is slightly higher at 107.20, and USD/CHF continued to climb to .9673.

CHF

The lower-yielding franc kept returning its earlier safe-haven gains as traders have been flocking back to the dollar once more.

EUR/CHF went on to climb from 1.1898 to 1.1965, GBP/CHF is up from 1.3785 to 1.3829, AUD/CHF rose to the .7500 handle, and CHF/JPY is down to 110.80.

Watch Out For:

  • 12:30 am GMT: Australia MI leading index (0.4% previous)
  • U.S. President Trump meeting with Japanese PM Abe today