The U.S. dollar was on its back foot much of yesterday and has been unable to recoup much of its losses overnight.
The greenback is headed for its biggest weekly decline since March as traders process the “dovish” rate hike from Wednesday.
Yesterday was also a rough day for Wall Street with every major index falling sharply. President Trump surprised many by announcing he would not sign a continuing resolution to fund the government until February and push back the border wall fight until Democrats take over the House. As a result, the equity sell-off deepened and allowed the Japanese yen to rise. Secretary of Defense, James Mattis, also announced his resignation late yesterday. While the move did not have a direct effect on currency markets, it highlights the political-driven trading day.
There is a plethora of economic data scheduled for release this morning and so far looks dollar-negative. The Commerce department reported that its final revision of third quarter GDP grew at a 3.4% annualized rate, a downward revision from 3.5%. Nevertheless, the print represents impressive growth. A separate report showed that durable goods orders also disappointed. Orders rose only 0.8%, failing to meet estimates of a 1.6% uptick. Non-military capital goods orders excluding aircraft, dropped 0.6%, a poor sign for future business investment.
Later, personal spending and personal income will cross the wires, followed by the Fed’s favored inflation gauge, the PCE Deflator. The University of Michigan consumer confidence number and Kansas City Fed manufacturing will end the week at 10 a.m.
Look for thinning liquidity as many traders pack up for the Christmas holiday. Tempus will have shortened hours on Monday, December 24th, and will be closed on Tuesday, December 25th.
What to Watch Today…
- Personal Spending, Personal Income and University of Michigan
The complete economic calendar can be found here.
After surging yesterday, the Euro took a sharp drop around 3 a.m. Eastern. The Euro remains within striking distance of its strongest level in nearly two months and is about 1% stronger on a weekly basis which would be its best week since September. As Europeans head out for the weekend, EUR/USD is likely to take its cues from the heavy U.S. economic docket today.
The sterling benefited from dollar weakness yesterday and while GBP/USD experienced some volatility overnight we open our session at familiar levels from yesterday. Data showed that the U.K. economy grew 0.6% in the third quarter, which was unrevised from the previous estimate.