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Forex today: a firmer dollar again weighs on commodity bloc

Forex today had a firmer dollar that weighed on the higher beta bloc and weak commodities. 

WTI has ended lower on Wednesday while the DXY was rising by 0.24% at 93.60 by the close between a range of 93.171 and 93.650. There was a drop in domestic crude supplies but also there was an unexpectedly large rise in gasoline inventories. Copper was a weight as well. AUD dropped to 0.7558 the low from 0.7635.

Bond markets were elevated, squashing the benchmark yield on the US 10-year note to 2.3118% the low from 2.3616% while a modest pick was in play into the last hours of the NY session. 

As for the currencies, EUR/USD was better offered throughout the day on the back of lower Bund yields falling below support with euro to 1.1780 the low from 1.1840 the high. The yen was sideways between 111.99 and 112.64 while cable made recovery attempts from 1.3358 the low to 1.3448 the high after the UK appears to be failing to get an Irish border agreement and PM May remains under pressure to squeeze through a deal in the divorce package before next week.

In terms of data, the inline ADP report was a solid preview of this week's nonfarm payrolls on Friday. ADP came in as expected at 190k vs 235k prior. Indeed, the focus instead stays with the Fed next week and the US economy in general with politics supporting the greenback of late. There is optimism over a 20% corporate tax cut and the need for the Fed to continue its path of normalisation throughout 2018 and into 2019.

Key events ahead in Asia

  • AU: Trade Balance (Oct).
  • AU HIA New Home Sales (MoM) (Oct).

Key notes

  • US: Private sector employment increased by 190,000 jobs in November - ADP
  • WTI down to fresh lows and eyes a run to $55.79 before $55 (psychological level)


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