Optimistic Trump Boosts US Dollar

Daily Update - 01st March 2017

Yesterday Markets

• AUD HIA New Home Sales
• GBP Gfk Consumer Confidence
• EUR Gross Domestic Product & Consumer Price Index
• USD Gross Domestic Product, Chicago Purchasing Managers Index, Consumer Confidence & Trumps Speech to the Congress

Yesterday Explained

Negative HIA New Home Sales report from Australia Did not make much of a impact to Australian Dollar. This was followed by Gfk consumer confidence report form UK, which also reported a negative figure in return making pound weaker. Poor Consumer Price index figures from France added further woes to declining EUR as investors awaited U.S. President Donald Trump's speech to Congress for fresh hints on his economic plans.

On the US data Front, the U.S. economy expanded at a slower pace in the fourth quarter. Gross domestic product rose at a 1.9 percent annual rate in the fourth quarter, the Commerce Department said in its second estimate, as downward revisions to business and government investment offset robust consumer spending.

Trump's speech faced a high bar in the way of the US dollar rally preceding the address as a result of several Fed comments and, indeed, Trump managed to lift the USD back towards those levels as the speech confirmed the $1 trillion in infrastructure spending, while staying away from attacking US trading partners and the media. It was the most optimistic speech since the start of the Trump presidency.

Odds of March Fed hike rose to 52% because of this. The Fed's Dudley said that the case for hiking now has become a lot more compelling. What made it seemed coordinated was a comment from the Fed's Williams shortly before. He said a hike deserved 'serious consideration' at the meeting in two weeks.

Today’s Reports

• AUD Gross Domestic Product
• EUR Markit Manufacturing PMI, Unemployment Change, Unemployment Rate, Consumer Price index & Harmonized Index of Consumer Prices
• GBP Markit Manufacturing PMI, Consumer Credit & Mortgage Approvals
• USD Personal Spending, Personal Income, Markit Manufacturing, ISM Manufacturing, ISM Prices Paid, Construction Spending
• CAD BOC Rate statement & BOC Interest Rate Decision
• USD Speeches from FOMC Members – Kaplan & Brainard

Today’s Focus

Another busy day in the markets as key data will come out from Australia, Euro zone, UK and USA while a rate decision awaits in Canada. Day will start with Australia releasing GDP which is measure of the total value of all goods and services produced by Australia. This will be followed by Markit Manufacturing PMI, Unemployment Change & Unemployment Rate from Euro Zone.

Mid-day UK will release Markit Manufacturing PMI which captures business conditions in the manufacturing sector. This will be followed by Consumer Credit which is an amount of money that individuals borrowed in the previous month and Mortgage Approvals reports which presents the number of various Mortgage Approvals.

Next up will be Consumer Price index & Harmonized Index of Consumer Prices from Germany. The evening will be full major data from USA where main focus will be on ISM Manufacturing PMI. This shows business conditions in the US manufacturing sector It is a significant indicator of the overall economic condition in US. This will be followed by Interest rate decision from Canada which is expected to remain the same.

The day will end with Speeches from FOMC members Kaplan & Brainard. Markets will keep a close ear as to what they have to say after Trumps optimistic speech to the congress.