Market Drivers January 24, 2018
US Officials talk drives USD down
UK Labor data solid
Nikkei -0.76% Dax -0.02%
Europe and Asia:
GBP UK Wage 2.5% vs. 2.5%
USD Existing Home Sales 10:00
The US dollar took another drubbing in London trade today after a string of US officials made dollar damaging comments at Davos. Treasury Secretary Mnuchin kicked things off by stating that a weak dollar is good for US trade signaling to the market that the Administration was perfectly content with the trade-weighted dollar sitting at multi-year lows.
Commerce Secretary Wilbur Ross then added to the melee by making a series of statements that could only be viewed as provocative. He noted that there will be more trade actions to come and stated that “trade ware happen every day”. He also noted that US would consider its options if China chose to retaliate.
Some of this rhetoric may be more bark than bite, but it has clearly introduced a destabilizing note into the market. With USDJPY having broken the psychologically key 110.00 level, the bears are in full control of the trade and any small economic surprises to the downside could push the towards longer-term support at the 108.00 level.
In North America today, the market will only get a smattering of 2nd tier housing data today, which could add marginally to dollar’s woes, but unless we get some additional commentary from Davos, some respite is likely.