The USD Index, a measure of the strength of the USD against a basket of global currencies, closed in the red for the second consecutive day, taking the USD`s net gain for the week to flat. As it stands the USD index is testing 101 which will have both buyers and sellers excited at a prospect of taking control of this key level. Sellers will look to continues on yesterday’s selling by capturing 101 in a bid to attract more sellers to drive the dollar lower for another test of the 100 level. Buyers on the other hand will view 101 as their opportunity to maintain control in the medium term and will go all in to defend the level in hopes of reaching 102.
US equities traded mixed as markets grow weary of waiting for the tax reform announcements by Trump, resulting in the NASDAQ 100 underperforming to close with a loss of 0.37% while the DJIA and S&P 500 just about managed to stay in the green, gaining 0.17% and 0.04% respectively. Asian equities showed their dismay at a lackluster Wall Street by closing in the red as we saw the Nikkei 225 losing 0.6%, the ASX 200 losing 0.8% and the Shanghai composite losing 0.5%.
In commodities we saw gold finally pop above 1250 as bulls reached a pivotal target since their aggressive campaign beginning in mid-December, which has seen the precious metal gain over 130 USD since then. 1250 will be a pivotal level in the coming days with bulls looking to greedily go beyond to 1275 while bears, now stretched thin, will look to hold the level in hopes of heading back south to 1200.
Today’s key data comes from Canada and the USA. Out of Canada we see the release of the CPI m/m figure which will indicate how well the Canadian economy is doing, with a better than expected print likely to see the CAD strengthen as traders’ price in a heating up of the Canadian economy while a worse than expected release will see the CAD weakened as traders’ price in a cooling Canadian economy. Out of the US, we have the release of the Revised University of Michigan Consumer Sentiment figure, which will show just how optimistic consumers in the USA are regarding the relative financial and economic stability of the US. A better than expected release will see the USD regain some strength as traders’ price in an anticipated bump higher in economic growth as consumers begin to spend money and vice versa, should the figure disappoint.