The greenback was trading near three-week lows overnight as lackluster US inflation data and diminishing expectations that Republicans will be able to push through a tax overhaul this year weighed it down.
This morning, however, US CPI data came in about as expected, Retail Sales came in better (inclusive of revisions), and Empire Manufacturing was weaker. The US dollar moved higher initially on the data release, then reversed, and has since shot through the high of the day. USD/CAD trading at 1.2785 at time of writing.
Senate Republicans indicated yesterday that their tax overhaul plan would be linked to the repeal of a key component of Obamacare, complicating efforts to pass the bill. Growing doubts over the tax overhaul have hit the dollar in recent sessions, sending it down by more than 1% since last week.
Demand for the euro continues to be underpinned by yesterday’s solid euro zone growth data, offering further evidence that the region’s economic recovery remains on track and supporting the ECB’s move to begin reducing its bond-buying program. EUR/CAD and EUR/USD are both up on the day trading at 1.5115 and 1.1825 respectively, at time of writing.
Oil prices fell nearly 1% today, continuing yesterday’s slide after International Energy Agency cast doubts over the past few months’ narrative of tightening fuel markets. Investors are keeping a close eye on developments in the Middle East. Brent Crude is currently trading around ~$61.60 with WTI Crude near ~$55.14.
The Middle East has suddenly become a much riskier place to do business over the last two weeks. Some reasons include: sweeping arrests of influential Saudis in a massive corruption probe; a missile intercepted near Riyadh which had been fired from rebel forces in Yemen; the resignation of the Lebanese prime minister Saad Hariri while he was in Saudi Arabia, allegedly because he feared assassination at home; and a pipeline explosion that caused a fire in a village in Bahrain and was blamed on Iran.