$1350 down $12.90 and 88.84 down .39 respectively.
From Marc to Market:
It was dramatic. Following the BOJ and ECB's rather mild rebuke of dollar's depreciation, US President Trump cautioned that his Treasury Secretary comments were taken out of context, and in ant event, he, the President ultimately favored a strong dollar. The dollar, which had continued fall after Draghi's post-ECB meeting comments, shot higher in the US afternoon in response to Trump's comments.
The market took advantage of the dollar's recovery to sell it at better levels. The dollar has surrendered more than 61.8% of yesterday's recovery. Ultimately, market participants realize that policymakers wishes are hardly the stuff that makes for the durable trends that are often apparent in the foreign exchange market. Whether or not US officials want or like a weak dollar in the short-term that is what they have. That said, we look for a consolidative tone to emerge as the market digest the combination of the explosive news stream and the extended positioning.
Fresh developments have been light. The main economic data was Japan's December CPI. The headline rose from 0.6% to 1.0%. However, this was a function of fresh food and energy. When these items, which may not be sensitive to monetary policy, are excluded the pace was unchanged. The core, which the BOJ targets at 2% remained at 0.9%. Excluding fresh food and energy, more like the US core rate, was unchanged at 0.3%.
The UK reported its first look at Q4 GDP. It rose slightly more than expected at 0.5%. The year-over-year rate slipped to 1.5% from 1.7%. The last time the year-over-year print was this low was in Q1 13. Details are not provided with the initial estimate, but it does appear that a pick up in services may have been the key to the upside surprise. Sterling, which like the other major currencies, was already moving higher extended its gains.
The North American session features Canada's CPI and Q4 US GDP. Canada's CPI is expected to have softened in December. A 0.3% decline would offset a rise of a similar magnitude in November and pull the year-over-year rate back below 2%. Bank of Canada Governor Poloz did not seem particularly hawkish in comments from Davos. Poloz noted that while the exchange rate it is important for exporters, the key is the strength of its main export market, the United States.
The US reports Q4 GDP, and in doing so, renders the other reports today, including the advance merchandise trade balance and durable goods orders less interesting....
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