US stocks soared to fresh record highs but didn’t hang around there for too long, eventually closing the day lower. Funny price action to see but today will confirm the longest bull-run in US market history (unless we drop 20% today), but also one that has been met with scepticism every step of the way. The dollar remained under pressure, Trump’s lean on interest rates and the Fed still resonated and the USD index traded .58% lower on the day. The weaker greenback allowed others to take control, EURUSD was up over .8% at one stage having traded just above 1.1600 area, while GBPUSD had a look just above 1.2900. Only the JPY was weaker vs the dollar, the Japanese currency lower right across the board as risk was favoured and the go to safe haven was left wanting until late towards the US close. Two close Trump allies were found/pled guilty to various offences, Manafort briefly managed Trump’s election campaign while his long term lawyer and confidant pled guilty to tax evasion and campaign finance violations. Not good news for Trump as the witch-hunt draws closer but he’s unlikely to feel any pinch from direct fallout, it’s the direction these investigations are going which could cause some jitters in market’s should Trump find himself impeached.
It wasn’t just about the USD yesterday, GBP was also slightly firmer across the board, pushing EURGBP lower while GBPUSD moved higher. There wasn’t really anything driving this big change, some positive public sector borrowing yesterday morning started the day on the front foot, while a meeting between the EU’s chief negotiator Barnier and the UK’s Raab didn’t shed any fresh light, but showed a shared desire to get a favourable outcome. Any news is good news at this point but Barnier has been resolute that the EU will not just bend to the UK’s demands and criticised the UK’s ”no-deal” stance. Both agreed that this would be the worst possible outcome for both parties so at least that is something! EURGBP briefly traded to .9000 before sellers quickly pushed the pair back lower. .9030 should hold any moves higher for now, while .8950 area offers some light intraday support.
Data remains light today but the dollar will have its sights firmly focused on this evenings FOMC minutes. The may offer some reprieve providing the Feds language doesn’t change too much. Markets will be looking for subtle word changes to assess the Feds conviction to their forward guidance for two more rate hikes this year but should they sound in any way cautious then the dollar weakness may only just be getting started. Personally I see little reason for the Fed to start sounding cautious and tonight’s minutes provide a good opportunity for the USD to bounce higher following the pullback from the last few days. 1.1600 acts as resistance to the upside for EURUSD, while support back towards 1.1442 area will likely hold up today on any drop lower.