The U.S. dollar continued yesterday’s momentum much of the night but has given back most of its overnight gains by the U.S. open.
Nevertheless, the greenback remains at the stronger end of the ranges against most of its European counterparts. The dollar gained yesterday as stocks fell after U.S. Treasury Secretary Mnuchin announced he would be pulling out of “Davos in the desert” event in Saudi Arabia. President Trump appeared to change course as well and step up his criticism of Saudi Arabia and promised “severe” consequences for the apparent murder of journalist Jamal Khashoggi.
Chinese GDP disappointed causing Asian stocks to trade lower and benefiting safe-haven currencies but verbal intervention by Chinese officials caused a turnaround. U.S. futures show that American shares will open higher and try to claw backs some losses from yesterday’s session.
Later this morning, existing home sales will cross the wire. The Fed’s Bostic will speak at noon in Macon, GA and Dallas Fed President Kaplan will speak this afternoon in New York.
The Euro traded lower yesterday and continued to fall during the Asian session, briefly coming within range of a two-month low against the greenback. Italian 10-year bond spreads rose over Germany’s by the highest level in more than five years due to disagreement with the Italian budget. The European Commission wrote a letter to Rome that said its spending plans for 2019 were an “obvious significant deviation” from the EU’s fiscal rules.
The European Central Bank will meet next Thursday.
The Canadian dollar is the biggest mover to start the day, losing over half a percent in thirty minutes against the U.S. dollar following the release of weak economic data. Canadian retail sales fell 0.1% in August, failing to meet a forecast of a 0.3% gain. A separate report showed that Canadian inflation rose 2.2% year over year in September, considerably lower than the 2.7% forecasts. The core reading was also lower. While the data will allow the Bank of Canada to takes things slowly, the central bank is still widely expected to raise rates when they meeting next month.