US Political Concerns Hit the Dollar Hard

The dollar was once again firmly on the back foot in yesterdays trading. After a relatively quiet Asian session the momentum gathered in the London and New York sessions with Euro moving to it’s highest level in 6 months and the Dxy is now trading around 98.20 having been up around 99.60 just a couple of days ago.

The Euro really started the move as topside stop losses were triggered above the trend line resistance and recent highs, this was helped by supportive data out of Europe with the Euro ZEW beating expectations (35.1 vs exp 29.1), but continued through the session.

Further fuel was added to the fire as Senate leader McConnell demanded that any tax cuts in the US be deficit neutral. This is of course contrary to the Trump plan that the cuts will stimulate the growth which will in turn reduce the deficit – and therefore throws the whole plan in jeopardy. Add to this, the continuing saga with the FBI and Russia and things are not looking great for the Trump government and this will continue to translate through to the dollar and risk in general.

Looking ahead to today and in the current conditions we should see traders continue to look for levels to sell the Usd, it’s another fairly quiet day on the fundamental economic date front which should free up smoother trading conditions. This morning we have just had NZ PPI data, which came out slightly better than expected but hasn’t really hit the Kiwi level, later in the day Aussie Wage Price data is due at 11.30 am but that’s about it for the Asian session.

Into the London session and the focus will move to sterling (which is still sitting under the 1.3000 level) as employment data is due out at 6.30 pm, this is followed by the Final Euro CPI data at 7.00 pm.

Into the US session and we have Canadian Manufacturing data due at 10.30 pm followed by the usual Crude Oil Inventories out of the US later in the session, traders will be looking at this closely as the Oil price had been volatile in recent sessions and Cad in particular has been trading well on the back of it’s moves.

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