Forex today: Gold play s catch up with weak dollar, Mnuchin jawboning?
Forex today was a wild ride with blue sky rallies for the bulls and an, "I told you so," could be heard ricocheting around the market as gold took off to play catch up with a bearish dollar trend.
The question that the market has been left to mull over is whether or not US Treasury Secretary Mnuchin just signalled a change in the US dollar policy or not, as the market certainly thinks so judging by the price action.
In the short term, both Mnuchin and President Trump have said before that a weak dollar is good in the short term but a strong dollar is a reflection of the strength of the US economy in the longer term. Today, in the longer-term, Mnuchin explicitly acknowledged, "the strength of the dollar is a reflection of the strength of the US economy."
The dollar has extended the decline from mid-Dec's business and fell all the way to 89.1580 having traded as high as 90.1130. The US ten years traded between 2.61%-2.66% and closed at 2.65%, +1.35%. On the back of the dollar's decline, Gold is now testing the territory above the neckline of a multi-year inverted head and shoulders with price headed to the post-Brexit vote peak and 38.2% of the 2011-15 drop at 1,1380/75. A breakout area which is just above the highs of the July 2016.
EUR/USD rallied to 1.2415 the high from a low of 1.2291 and cable jumped through hoops right onto the 1.42 handle and scored a high of 1.4242. The yen was testing waters below the 109 handle vs the dollar with USD/JPY making a low of 108.996 from 110.34 the high.
The commodity futures price index surged and the Aussie made a high of 0.8080 from a low of 0.7993 while the Kiwi rallied to 0.7434 from a low of 0.7345. The Loonie ran to 1.2315 from 1.2427 vs the greenback while WTI made a high of $66.01bbls up two dollars on the day.
Key notes from US session:
- US Tsy Sec. Mnuchin: Weaker dollar is good for trade
- Crypto Today: Bitcoin records modest gains, XLM outperforms rivals
- Gold finally plays catch up with dollar's long-term decline
- US: Strong retail holiday season points to a solid Q4 GDP - Wells Fargo
- US Existing Home Sales: Supply constraints contract closings - Wells Fargo
Key events ahead:
Kiwi CPI Q4 - NZ: Q4 CPI likely rose by 0.4% - Westpac