The US dollar rallied then reversed on tax bill developments and jitters over the investigation into Trump’s dealings with Russia. Trump Jr. and other business associates are scheduled to testify this week. Data was better than expected as factory orders showed a smaller than expected decline, and the core version of the report reflected stronger business spending in anticipation of tax cuts. The ISM non-manufacturing PMI is due next and a dip from 60.1 to 59.2 is expected.
The euro took a sharp tumble on reports that the SPD will still think about forming a coalition with Merkel if members give the green light next weekend. The issue of immigration is still on the table, so there are no guarantees that a deal will be struck yet. Data has been mixed as the region’s Sentix investor confidence index came in weaker than expected at 31.1 versus the 32.3 consensus while Spain reported a smaller increase in joblessness of 7.3K versus 54.3K. Final services PMI readings and the region’s retail sales report are lined up next.
The pound continued to edge higher on stronger Brexit deal hopes, even as May and the EU remain at odds when it comes to the Irish border issue. UK data was better than expected as the construction PMI jumped from 50.8 to 53.1 versus the 51.2 consensus. The services PMI is due next and a dip from 55.6 to 55.2 is eyed.
The franc was in a weak spot to most of its peers as risk-on vibes were present for most of the day. There were no reports out of Switzerland then and none are due today so market sentiment could keep pushing franc pairs around.
The yen was also mostly weaker but it managed to chalk up some wins to the dollar. Japanese consumer confidence rose from 44.5 to 44.9 versus the 44.8 consensus. There are no reports due from Japan today so bond yields and risk sentiment could drive yen price action.
Commodity Currencies (AUD, NZD, CAD)
The Aussie enjoyed a strong rally on mostly upbeat data today. The current account balance had a wider deficit of 9.1 billion AUD versus the estimated 8.8 billion AUD shortfall but still an improvement over the earlier 9.7 billion AUD deficit. Retail sales ticked higher at 0.5% versus the projected 0.3% uptick while the previous reading saw an upgrade. The RBA statement is due next and no rate changes are eyed. Meanwhile, the Loonie was able to hold its ground despite higher US oil rig counts and weaker crude oil prices.