U.S. dollar pairs were a mixed bag of nuts last week, driven by counter currency influences on top of a heavy economic calendar and Fed speaking schedule.
United States Headlines and Economic data
- GDP Q4 final reading up 2.2%, as expected, but leaves full year short of Trump’s goal
- US weekly jobless claims unexpectedly fall
- US trade deficit narrows to $51.15B vs. $57B est.
- Fed’s Harker still sees one rate hike ‘at most’ this year
- Another Regional Fed Factory Survey Shows New Orders Weakening
- Former Fed Chair Yellen says bond market could be hinting need for rate cut — not a recession
- Fed should consider holding more short-term bonds: Rosengren
- US housing starts fall in February on weak single-family homebuilding
- Consumer confidence falls in March in another sign of economic anxiety
- Fed’s Daly says she is not ‘freaked out’ by yield curve inversion
- U.S. current account deficit hits 10-year high; firms bring back more foreign profits
- Fed’s George says wait-and-see approach needed for policy
- Fed’s Williams says he is not as concerned about U.S. recession
- Fed’s Clarida: Fed can’t ignore U.S. exposure to overseas risks
- Fed’s Quarles says more rate hikes could be ahead ‘at some point’ as economy improves
- Fed’s Bullard says spate of weaker data likely ‘temporary’
Major Market Drivers for the U.S. Dollar
As mentioned at the beginning, there were a plethora of influences on the currency markets this week, and in the Greenback in particular, every day was full of economic updates and commentary from members of the Federal Reserve. Counter currency influences were also a big driver, and when all mixed together, it’s probably safe to say that was a lack of a uniform theme or behavior among USD pairs. So, we’ll just keep it simple and tackle each group of drivers separately this week.
The U.S. economic calendar was pretty stacked, but looking at the one hour chart overlay above we’d say that there wasn’t a major catalyst among the group for uniform price action among USD pairs. And as a whole, it looks like we got a negative leaning update on the U.S. economy as housing data (weaker housing starts and pending home sales), consumer confidence (124.1 in March vs. 131.4 in February), and GDP (2.2% vs. 2.6% previous) were weaker-than-expected. Again, no major reactions from U.S. economic data this week, but this negative lean could have been an influence on the Greenback’s performance against the Aussie and Loonie, two currencies that lacked negative drivers from their home countries.
Federal Reserve members were out in full force, commenting on monetary policy and their economic outlooks through various speeches this past week. In general, the Fed members pretty much stuck to the party line of staying “patient” with monetary policy and data dependency, and that the general mood on the economy is that the U.S. still looks pretty solid.
Check out the links above in the “Headline” section to read up on their comments, but probably the most interesting comment came from Fed Vice Chairman Randal Quarles, who ever-so-slightly broke from the “staying patient” rhetoric to add on that additional rate hikes “may be necessary at some point.”
Counter currency drivers is probably one of the top influences on USD pair performance this week, and besides the Brexit drama and dovish shift from the RBNZ to knock the Kiwi and Sterling lower, the big story is likely the fall in global yields. With global recession fears rising, government bonds have been scooped up for safety, which dramatically pushed yields lower in many countries, with some even going negative (most notable is the fall in German bund 10-year yield into negative). This spread between U.S. bond rates and non-U.S. bond rates have likely been supportive for the Greenback this week, especially against the euro, the Swiss franc, and the Japanese yen–all countries that sport negative yields on their government bonds.