In another mostly quiet day in terms of data releases, forex market participants’ attention remained firmly on the US tax reform front. Jobless claims and wholesale inventory data out of the US did generate some interest, though market reaction following the releases was subdued. Meanwhile, Brexit negotiations are resuming today.
At 1526 GMT the dollar index traded 0.25% down on the day at 94.63. Once again, the prospect of a delay in the delivery of tax cuts or reforms offering less of a benefit to US corporations than initially expected, has been weighing on the greenback. A Senate tax-cut bill that differs from the one in the House of Representatives is expected to be unveiled today, further perplexing the situation in case the two versions stand far apart. According to the Senate Finance Committee, today’s release would constitute a "conceptual mark" rather than the delivery of a detailed legislative text.
Dollar/yen was 0.2% down on the day, further distancing itself from Monday’s eight-month high of 114.72. At its lowest today, the pair recorded a nine-day low of 113.22. Euro/dollar last traded up by 0.3% at 1.1630. The pair started the day below the 1.16 handle and rose as high as 1.1644, a six-day peak.
Trump’s Asian tour continues. While in Beijing, he made reference to unfair trade practices on behalf of China, blaming his predecessors at the White House for the situation.
On the data front, US jobless claimants for the week ending November 4 rose to 239k from 229k during the preceding week (this constituting a near 44-½-year low), exceeding expectations of 231k. The rise was seen as evidence that claims processing disrupted by the hurricanes hitting US soil has started to improve. Despite the increase, claims remain comfortably below the 300,000 mark. This feat, which holds true for the 139th consecutive week (the longest since 1970), is seen as denoting a robust jobs market. The four-week average of first-time claimants, which is less susceptible to weekly volatility, fell by 1.25k to stand at 231.25k, its lowest since 1973. Continuing claims, which include individuals receiving benefits after an initial week of state aid, increased by 17k relative to the previous week to reach 1.90 million. Expectations were for a reading of 1.89m. The US currency did not react much relative to majors within the first minutes of data release.
September wholesale inventory data out of the US released later in the session showed inventories rising by 0.3% m/m, as expected. August’s figure saw a downward revision to 0.8% m/m growth from the previously reported 0.9%. Market reaction was limited as the data went public.
As Brexit talks are resuming today, euro/pound traded 0.3% higher on the day at 0.8869. Pound/dollar was little changed relative to yesterday’s close, trading at 1.3107. PM May’s government is seen as weakening following two cabinet resignations over the last week.
The European Commission today raised its growth forecasts for 2017 eurozone growth to 2.2% – it’s strongest in a decade – from the previous 1.7%. At the same time, it cut its forecast for 2017 UK growth to 1.5%, while it projects a slowdown for the nation in 2018-19 as well.
Kiwi/dollar was down by 0.2% after rising to a more than two-week high of 0.6979 earlier in the day. Despite the pullback, the pair retained most of its gains following the RBNZ delivering what was perceived as a "hawkish hold" of rates at record low levels – the central bank’s official cash rate stands at 1.75%. October electronic card retail sales out of New Zealand are due at 2145 GMT.
In commodities, gold continued gaining on the back of dollar weakness, posting a three-week high of $1,288.13 an ounce during today’s trading. It last stood 0.2% higher on the day, trading at $1,283.50 an ounce. WTI was 0.9% higher at $57.32 a barrel and Brent was 0.6% up at $63.87 per barrel. Earlier in the week they both rose to their highest since July 2015, touching $57.92 and $64.65 a barrel respectively.
ECB Board member Sabine Lautenschlager will be giving a speech at the "Monetary, Financial, and Prudential Policy Interactions in the Post-Crisis World" conference in Washington DC at 1820 GMT.
