The dollar index fell to a 2-week low of 99.91 in the early hours this morning, breaking the significant support level at 100.00. The dollar index plunged 0.58% on Wednesday April 12, and 0.88% in the past two days. The sudden fall was caused by Trump’s dollar overly strong statement for the second time this year. He expressed that if the dollar is much stronger against other currencies, it will weaken exports and corporate competitivity. Trump’s weak dollar stance is likely to keep on reining in the dollar strength. The dollar index saw a rebound in the past two hours, the bulls have recovered the significant level at 100.00.
USD/JPY hit the lowest level of 108.71 since November 17. The recent strengthening of the yen hit Japanese exports. Nikkei 225 index has turned bearish since mid-March, hitting the lowest level of 18292.50 since December 5 this morning.
The Australian employment change for March rose substantially to 60.9K in March, from 2.8K in February, beating expectations of 20K, marking the largest improvement since November 2015. The outperforming data resulted in the surge of AUD/USD this morning, hitting the highest level of 0.7594 since April 4, testing the psychological resistance level at 0.7600.
Yesterday the Bank of Canada (BoC) announced its rate decision on hold at 0.5%. The BoC stated that although the recent data shows the economy is sound. However, the US economic outlook is still uncertain under Trump’s administration, which will likely weigh on the Canadian economy. The BoC revised the economic growth forecast upwards from 2.1% to 2.6% in 2017, helped by the sudden rise in residential investment and increase of consumer expenditure. However, business investment and employment are continuing to weaken. The economic growth forecast in 2018 is revised downwards from 2.1% to 1.9%. The overall statement showed mixed signs.
Uncertainty over the Trump administration will affect not only the economic outlook of Canada, but also that of other neighbouring countries and major economies.
The US EIA crude oil inventories (the week ending April 7), saw the biggest drop in 2.166 million barrels this year. However, the figure failed to push oil prices higher as it was trading at the major resistance zone, where the selling pressure is heavy. Spot WTI retraced around 1%, and spot Brent crude oil retraced around 1.13% on Wednesday April 12.
Keep an eye on the US initial jobless claims (the week ending April 7), to be released ta 13:30 BST this afternoon, followed by the US Michigan consumer sentiment index (Apr) at 15:00 BST. It will likely affect the strength of the dollar and dollar crosses.
The US retail sales and CPI for March, will be released at 13:30 BST on Friday, it is one of the most important pieces of data for this week. Be aware that it will likely cause volatility for the dollar and the dollar crosses.