On a Wing and a Prayer

On a Wing and a Prayer

No need to elaborate in detail  today as the dollar is firming  “on a wing” that White House press corps  is correct that the Trump Administration is readying an infrastructure plan for Jan 30 and a “prayer” for a tax bill deal
While the US economy is booming, President Trump’s long-standing pledge may be upon us as infrastructure spending at both a federal and state could be a real game-changer for the dollar as the resulting massive pick up in business investment could propel the US economy to 4% growth,ceteris paribus. The headline boosted stocks and yields in late NY trading and lit a fire under the dollar bulls. The one exception was Sterling which bucked the trend dollar on reports that Prime Minister May and the DUP were close to a deal on the Irish border deadlock.

Looking forward, an extension of the latest dollar churn might all boil down to this evenings wages data with the tail risk for a hawkish inference on the employment headline.  The jobs report will play a significant factor in keeping the dollar  rally alive and forwarding the view of an early 2018 rate hike
Japanese Yen

The bounce in US yields was convincing enough to propel USDJPY through the 113 level and only held back by the YCC debate after Governor Kuroda recapitulated his Hawkish deterrent overnight.

Also, the long USDJPY trade appears stable as some element of diplomacy enters the NK fray.
The Pound
Apart from digesting the infrastructure headlines,  stage whispers surrounding Brexit will continue to drive GBP sentiment

Gold
Predictably XAU hastened losses on this infrastructure news – as the sell the recent sell-off gathers speed as bid remain far and few between

Energy Markets 

Muted trading despite the boisterous inference from the  US tax reform and fiscal spend one-two punch.But perhaps fears that the Trump administration may float a gas tax to pay for infrastructure spending are presenting some headwinds?

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes