USD

The US dollar gave back some of its recent wins when the Trump administration’s tax reform plans encountered roadblocks. Geopolitical risks from North Korea also returned to the spotlight as South Korea flew military planes as a show of force over the Korean peninsula. Meanwhile, the IBD/TIPP Economic Optimism index posted a surprise drop from 53.4 to 50.3 versus the projected rise to 54.2. The FOMC minutes are due next and could spur additional volatility for dollar pairs.

EUR

The euro was able to breathe a sigh of relief when Catalonia’s president stopped short of declaring independence and instead expressed openness for dialogue with the Spanish government. Euro zone reports were mostly stronger than expected, except for French industrial production, keeping ECB tapering hopes in play. There are no reports due from the euro zone today so the focus could still be on political risk, particularly in Germany as coalition talks are still coming up.

GBP

The pound shrugged off Brexit concerns as data turned out mostly stronger than expected. Manufacturing production rose by 0.4% versus the estimated 0.2% uptick while industrial production came in line with estimates of a 0.2% increase. The goods trade deficit widened, however, as exports lagged. There are no major reports due from the UK economy today.

CHF

The franc had a mixed run as it reacted mostly to currency-specific events, losing ground to its European peers and scoring some wins on a bit of risk aversion as North Korean concerns resurfaced. The Swiss jobless rate also improved from 3.2% to 3.1% instead of holding steady as expected. There are no reports due from the Swiss economy today.

JPY

The Japanese yen took advantage of dollar weakness but was no match to pound and euro strength. Japan’s current account balance turned out better than expected at a surplus of 2.27 trillion JPY versus the estimated fall to 1.98 trillion JPY from the earlier 2.03 trillion JPY reading. Earlier today, the core machinery orders figure also turned out stronger than expected at a 3.4% gain versus 0.9%.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Loonie were able to take advantage of dollar weakness but the Kiwi was stuck in limbo due to political uncertainties in New Zealand. Earlier today, Australia reported an increase in its Westpac consumer sentiment reading from 2.5% to 3.6% to reflect stronger optimism. In Canada, building permits turned out weaker than expected with a 5.5% slump while housing starts surprised to the upside. New Zealand’s food price index is due next.

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