Intraday Market Thoughts

Optimism Abounds, USD Chops

by Adam Button
Nov 22, 2016 23:55

The drumbeat of optimism for a Republican-led US economy continued Tuesday. The Australian dollar was the top performer while the pound lagged. Aussie skilled vacancies and construction data are due next. The latest Premium video focuses on Gold/Silver dynamics and the USD, with additional focus on SPX, DAX ad FTSE.

Every day, another firm or analyst upgrades his US economic expectations and boosts forecasts for the dollar and stocks. The S&P 500 hit a record for a second day and the US dollar was mostly higher.

Economic data helped USD as existing home sales were at a 5.60m pace compared to 5.44m expected and the Richmond Fed improved to +4 from a flat reading expected. At the moment though, economic data is largely ignored as the market fantasizes about a Trump-led future of lower taxes, less regulation, higher rates and endless stimulus.

At some point there will be a reality check but the momentum right now is clear on the dollar's side. Dips are shallow, bad data is cast aside and seen as something from the past while good news strengthens the market's newfound conviction.

It's a short week in US trading as Thanksgiving brings a de facto four-day weekend starting Thursday. That might put the brakes on the dollar's run but a meaningful retracement is doubtful.

OPEC remains in focus and conflicting reports from unnamed sources have emerged with some saying a deal is virtually done to cap output for six months and others saying serious hurdles with Iran and Iraq remain. USD/CAD touched a two-week low Tuesday but quickly bounced back.

Asia-Pacific trading features a focus on Australia. Up first is the October report on skilled vacancies at 0000 GMT. The report that's more likely to move the markets comes 30 minutes later when the Q3 construction work data is out. The consensus is for a 1.6% decline.

Act Exp Prev GMT
New Home Sales
591K 593K Nov 23 15:00

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