Dollar Down Ahead of a Slew of Geopolitical Events

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The U.S. dollar is headed for a fourth day daily loss as political tensions benefited the Japanese yen and Brexit headlines boosted the sterling.

Overview

The greenback was only able to make small gains against Australia and Kiwi dollars following disappointing Australian building data.

There is plenty on today’s docket to keep traders busy.  Pending home sales, factory orders and durable good orders will all cross the wire later this morning.  Jerome Powell will be back in front of Congress today.  The Fed Chair held that growth has been uneven which sent the stock lower.  Powell will likely maintain is dovish outlook during today’s session.  Powell will not be the only show on the Hill today as President Trump’s former personal lawyer, Michael Cohen, will give public testimony in which is he expected to implicate the President in illegal activity.  It is yet to be seen whether the fireworks make their way into market sentiment.

The President, meanwhile, is scheduled to meet with North Korea’s leader Kim Jong Un in hopes of securing a path towards denuclearization.

 

What to Watch Today…

  • Powell and Cohen on Capitol Hill; Trump in Vietnam

Complete Economic Calendar can be found here.

 

JPY

The safe-haven Japanese yen was on the offensive last night, before giving up nearly all of its gain in early trading.  Tensions between nuclear powers Pakistan and India have flared up causing additional worries in the region.  Pakistan said it shot down two Indian aircraft in the disputed region of Kashmir and arrested the pilots.  There are also reports of heavy fire at the border.  The Indian rupee is also under considerable pressure this morning but has rebounded some on rumblings that the Indian central bank would intervene.

GBP

The British sterling has been the best performing G-10 currency in 2019 and continued its march higher overnight.  GBP/USD rallied another percent higher and touched its strongest level since July of 2018.  As newly expected, Prime Minister Theresa May said she would be willing to allow an extension to the March 29th deadline which lessens that chance of a “hard-Brexit” and has boosted the sterling.  There also seems to be some thawing from Pro-Leave MPs on the so-called “Irish backstop” which some see as a glimmer of hope for May’s plan.   Political developments will be quick and plentiful today in the U.K. as Parliament is set to vote on a series of amendments to May’s Brexit motion which will start around mid-day.

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