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US Dollar Extends Gains as Fed Commentary Comes Back in Focus

US Dollar Extends Gains as Fed Commentary Comes Back in Focus

Ilya Spivak,

Talking Points:

  • US Dollar continues to rise as post-election trends remain in play
  • Japanese Yen declines as Nikkei gains, denting anti-risk demand
  • Sanguine, hawkish-leaning Fed-speak may add fuel to USD rally

Trends prevailing after Republican nominee Donald Trump unexpectedly won the US presidential election remained in play at the start of the trading week. The markets are betting that the on-coming US policy pivot may boost corporate earnings and stoke inflation. The former conclusion has proven supportive for share prices while the latter fueled speculation of a steeper Fed rate hike trajectory, driving the US Dollar upward.

At first blush, overnight price action appeared to deliver more of the same. The greenback pushed higher against its major currency counterparts, moving alongside surging US Treasury bond yields. The anti-risk the Yen proved weakest on the session as Japan’s benchmark Nikkei 225 stock index followed S&P 500 futures upward.

The upbeat mood was not universally felt however. Indeed, the overall MSCI Asia Pacific regional benchmark equities gauge declined amid worries about the President-elect’s position on free trade. Investors fear that the emergence of new trade barriers will hurt export-oriented emerging market economies as well as their commodity-producingsuppliers.

Looking ahead, a light offering on the economic data front seems likely to put Fed-speak in the spotlight. Comments from Rob Kaplan, Jeff Lacker and John Williams – Presidents of the US central bank’s Dallas, Richmond and San Francisco branches – are due to cross the wires. Rhetoric echoing the cautiously hawkish tone prevailing before the election may feed continuation of moves that have emerged thereafter.

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Asia Session

20:30NZDREINZ House Sales (YoY) (OCT)-14.2%--9.5%
23:50JPYGDP SA (QoQ) (3Q P)0.5%0.2%0.2%
23:50JPYGDP Annualized SA (QoQ) (3Q P)2.2%0.8%0.7%
23:50JPYGDP Nominal SA (QoQ) (3Q P)0.2%-0.1%0.1%
23:50JPYGDP Deflator (YoY) (3Q P)-0.1%0.3%0.7%
23:50JPYGDP Private Consumption (QoQ) (3Q P)0.1%0.0%0.1%
23:50JPYGDP Business Spending (QoQ) (3Q P)0.0%0.2%-0.1%
0:01GBPRightmove House Prices (MoM) (NOV)-1.1%-0.9%
0:01GBPRightmove House Prices (YoY) (NOV)4.5%-4.2%
0:30AUDCredit Card Purchases (SEP)--A$26.8b
0:30AUDCredit Card Balances (SEP)--A$51.3b
1:00JPYBOJ Kuroda speaks in Nagoya ---
2:00CNYIndustrial Production (YoY) (OCT)6.1%6.2%6.1%
2:00CNYIndustrial Production YTD (YoY) (OCT)6.0%6.1%6.0%
2:00CNYRetail Sales (YoY) (OCT)10.0%10.7%10.7%
2:00CNYRetail Sales YTD (YoY) (OCT)10.3%10.4%10.4%
2:00CNYFixed Assets Ex Rural YTD (YoY) (OCT)8.3%8.2%8.2%
4:30JPYIndustrial Production (MoM) (SEP F) 0.6%-0.0%
4:30JPYIndustrial Production (YoY) (SEP F) 1.5%-0.9%
4:30JPYCapacity Utilization (MoM) (SEP) -2.0%-2.6%

European Session

8:15CHFProducer & Import Prices (MoM) (OCT)0.2%0.3%Low
8:15CHFProducer & Import Prices (YoY) (OCT)-0.1%-0.1%Low
9:00CHFTotal Sight Deposits -518.6bLow
9:00CHFDomestic Sight Deposits -451.8bLow
10:00EUREurozone Industrial Production SA (MoM) (SEP)-1.0%1.6%Medium
10:00EUREurozone Industrial Production WDA (YoY) (SEP)0.9%1.8%Medium

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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