The US dollar caught a few gains against most of its counterparts as the US GDP was upgraded, Yellen sounded upbeat in her testimony, and the Senate version of the tax bill cleared a hurdle. However, there are still several risks that remain, including the full vote that the Senate might have on the tax bill this week. The core PCE price index is also due today and a weak result could remind traders of the cautious inflation outlook in the FOMC. Initial jobless claims, Chicago PMI, and speeches from FOMC members Quarles and Kaplan are lined up.
The euro managed to hold on to most of its gains despite warnings from the ECB Financial Review on risks associated with a stronger euro and higher interest rates. German retail sales and unemployment rate are due today, along with French and Italian preliminary CPI. However, traders might pay closer attention to euro zone CPI flash estimates as strong gains could renew expectations for an ECB hike next year. The headline reading is projected to climb from 1.4% to 1.6% while the core figure could rise from 0.9% to 1.0%.
The pound continued to advance across the board on improving Brexit sentiment as negotiating parties seem more amenable to a compromise. Data also turned out upbeat while today has only the Nationwide HPI on tap. With that, the attention could still be on Brexit as traders weigh the odds ahead of the next official meeting on December 4.
The franc also chalked up strong gains across the board as medium-tier reports turned out stronger than expected. The UBS consumption indicator improved from 1.51 to 1.54 while the Credit Suisse economic expectations index rose from 32.0 to 40.7. Swiss GDP is due today and a higher growth figure of 0.6% is expected versus the earlier 0.3% uptick.
The yen was on weak footing as traders stayed wary of risks from North Korea. The rise in US bond yields also drew traders away from the lower-yielding yen. Japan’s preliminary industrial production report turned out weaker than expected with a 0.5% uptick versus the estimated 1.9% gain. Housing starts data is due next.
Commodity Currencies (AUD, NZD, CAD)
The Loonie was still in a weak spot despite a larger than expected draw of 3.4 million barrels in stockpiles reported by the EIA. Traders appear to be positioning for a large build later on as the Keystone Pipeline resumed operations this week. There are also jitters surrounding the OPEC meeting as Russia could push for a review of the output deal extension by June. Data from Australia came in mixed but the currency appeared to draw support from better than expected Chinese official PMI readings.