The U.S. dollar trended slightly stronger overnight against most of its rivals but its weakening in early trading following dismal economic data. Orders for durable goods rose less than forecast in March, showing a slowdown in orders for goods expected to last for at least three years. Bookings rose 0.7%, failing to meet expectations of a 1.3% rise. The so-called core reading showed a contraction of 0.2%, versus expectations of a 0.7% rise.
The dollar was also under pressure yesterday after President Trump’s plan to overhaul the U.S. tax system was light on details. Investors had expected a more robust plan instead of one-page piece of paper. It is uncertain what kind of support the plan would have in Congress since most economists have indicated it would rapidly increase the debt.
Reports out of Capitol Hill show that Congress and the President are getting close to securing a funding deal to keep the government open. A deal must be reached by tomorrow or the government will shut down on Saturday. A shutdown would cause a drastic sell-off of the U.S. dollar.
The Euro is on the rise in early trading on general U.S. dollar weakness. As widely expected, the European Central Bank kept its current accommodative policy unchanged. Expectations of ECB policy tightening has grown in recent months as the economy improves and inflation has slowly ticked higher. In the past, ECB President has thrown cold water on tightening speculation. At the time of writing, Draghi is giving a press conference in which he has made some rather hawkish comments. Draghi has said that downside risks to the economy have further diminished and that risks are moving closer to being more broadly balanced. The common currency has spike to near a five-month high but continues to be volatile while Draghi is speaking.
The Canadian dollar is experiencing wild swings as geopolitical developments have dictated the fate of the loonie. The loonie had been under pressure as oil has stayed below 50$ a barrel and President Trump has attacked Canadian trade practices and implemented a trade tariff on soft lumber. However, the Canadian dollar rallied overnight as news broke that the United States will not leave the North American Free Trade Agreement, at least not yet. In what is being considered another broken campaign promise has boosted the Canadian dollar.
Canadian gross domestic product is due out tomorrow morning.