Forex Morning Briefing
$DXY, $EUR, $JPY, $GBP, $AUD
Commentary: USD is still struggling. PE
US President Trump’s jawboning the USD in Davos was not enough to help it out of the weakness boat.
And, During his, Q&A ECB President Draghi was doing his best to deflect questions on EUR then just as 1.2500 broke, Mr. Draghi said EUR’s gains were due to comments from ‘someone else.’
The ECB official now seems to have a preference to express currency policy through ‘sources familiar with the matter’, suggested a division in the ECB ranks was forming over removing the ECB easing bias in March due to the strong EUR.
The real near term game changer was President Trump suggesting that he ‘ultimately wants to see a strong USD’ and proving far more adept than Messers Mnuchin, Draghi ability to swaying the market that Secretary Mnuchin’s ‘weak USD’ comments were taken out of context.
Given the extend oversold USD positioning on the EUR, the market faded convincingly falling 125 pips tumbling below 1.24 with fast money speculators and weaker intra-day longs bearing the brunt of the move.
It is obvious that the US administration trade policy would benefit from the weaker USD policy, but I suspect President Trump’s latest support for USD comments are more about optics and little more than a case of temporarily taming the Dollar Bear ahead of his Davos Keynote speech Friday.
In the end, the market will decide USD’s fate, so the weaker USD narrative remains intact for Y 2018.
Heading for the weekend with US GDP and Durable goods on tap Friday, the Buck Short may be more sensitive to US economic data than they may have before President Trump’s comments.
So, we could more Short USD position squaring ahead of Friday’s US data.
Have a terrific weekend