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President Trump Contradicts Comments on Weaker Dollar; US & Canadian Economic Growth Data Mixed
Published January 26, 2018
US President Donald Trump stirred markets yesterday after saying that he ultimately wants to see the US dollar go higher; Trump claimed that US Treasury Secretary Steven Mnuchin’s comments on a weaker US dollar were out of context.
USD/CAD briefly rose yesterday on this news, however, later settled above the 1.2300 handle. Markets now look to President Trump’s closing address at Davos and US/Canadian economic data for further guidance.
Data on Canadian Consumer Price Index showed that consumer prices shrank by -0.4% month-on-month versus an expected -0.3%; year-on-year CPI data (often used as a barometer for overall inflation) held strong at 1.9%.
Advance US GDP quarter-on-quarter growth data came in slightly softer than expected with a reading of 2.6% versus an expected 3.0%; total 2017 GDP came in at 2.3%, well above a reading of 1.5% for the year 2016.
European Central Bank President Mario Draghi noted continued growth in the euro zone and maintained the bank’s pledge to support the euro via monetary stimulus; Draghi and other officials flagged concerns of currency manipulation after comments from Davos pushed the EUR/USD rate to 3-year highs.
Oil prices are set to record another gain this week as declines in US stockpiles spur demand; the ongoing weakness of the US dollar has also increased availability of the commodity by making it relatively cheaper in emerging markets.