The U.S. dollar depreciated against majors as soft Q4 GDP numbers on Friday and mixed comments on the desired strength and weakness of the currency made at the World Economic Forum in Davos put downward pressure on the greenback. The Trump administration is pushing its tough stance on trade, but tried to soften the tone in an effort to be more inclusive.
We began last week by wishing everyone the obligatory Happy New Year. And as it turned out, it has already been very happy for the U.S. equities bulls. This is also true for their international counterparts, even if politically challenged Germany is lagging a bit.
The year started out much as it ended with a nice little buy signal, which developed on Friday the Jan. 29, which was the last trading day of the year but did not kick in until the first trading day of the year. There were several signals, but you can see how it developed on the Russell as we had a 35% retracement at a 1535 low. The party continues.
The U.S. dollar is lower against major pairs only appreciating against the Swiss franc (CHF) and the Japanese yen (JPY). The greenback got a small boost from the release of the U.S. non-farm payrolls (NFP). The United States added 148,000 well below expectations but with the hourly wages rising 0.3% but that was not good enough to counter positive economic indicators released in Europe and the stronger jobs report in Canada.
Speculators are approaching the new year with an eye toward stock market gains and a tightening Federal Reserve. This is a tough combination for interest rate futures to rally against. However, commercial traders are holding their most bullish position since last April.
U.S. markets started where they left off for 2017. Initially, it didn’t look like this would happen. For the week between Christmas and New Year’s, the action was very questionable and by Friday they started selling.
The rubber finally meets the road, the Senate could vote on tax reform as early as Thursday. For a moment, lets assume it passes, then the House and Senate would have to hammer out a compromise. As we watch this drama play out, it is likely the best argument for term limits as it has become painfully obvious they support special interests as opposed to the business of the people.
Markets dodged another bullet as Irma was bad but not as bad as it could’ve been. That’s not to make light of the situation, it was a category 6 just the other day. But before any of you get excited Jesse Colombo @thebubblebubble tweeted a report from calculatedriskblog.com that Harvey could result in 300,000 new mortgage delinquencies.