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Daily Market Analysis
Dollar Charges On

Stephen Casey December 20, 2016

– Dollar Hits 14-year High

– Terror Attacks in Turkey, Germany, Switzerland

– BoJ Unchanged, Yen Weakens


Good morning. The US dollar continues to surge higher into the holiday break, eclipsing a 14-year high this Tuesday morning. The yen fell lower after last night’s Bank of Japan policy decision, as Japanese policymakers were unchanged, erasing all of yesterday’s yen gains. Monday was a rather important day from a geopolitical perspective, as a trifecta of terror attacks rocked through Turkey, Germany and Switzerland. President-elect Donald Trump’s victory was confirmed by the electoral college, who voted 304-227 against Mrs. Clinton. Interesting to note, for all of the hoopla leading up to yesterday’s vote, it was actually Mrs. Clinton who lost more votes to “faithless electors.”

The euro continues to crumble under the weight of the big dollar, losing ground as markets monitor the ongoing terror situation in Berlin. A manhunt is ongoing as authorities seek the individual responsible for murdering 12 people at a Christmas market late Monday evening in Berlin. Similar to the euro, sterling is slipping lower as well with little inspiration from the market at the moment. The pound has fallen more than 4 percent from last week’s FOMC meeting. Final Q3 GDP revisions for the UK will be released on Friday, capping off a very quiet data week overseas.

There is very little on the data calendar today, with no key US economic data releases until Thursday. Weekly jobless claims (Thursday) and third quarter GDP revisions (Friday) finish out the final week before the prolonged holidays break. The big dollar was higher on Monday, making marginal gains versus most major currencies as the dollar index popper higher. Chairman Yellen actually spoke yesterday afternoon, remarking on changing technologies and globalization in prepared remarks at a University of Baltimore graduation ceremony. Ms. Yellen did not mention monetary policy in her speech and focused instead on employment and the importance of a college degree. US equities made a meager charge higher on very low volumes as the Dow Jones Index keeps a close eye on 20,000.

The Canadian dollar was lower to begin the new trading week, slipping by a few basis points across the board even as oil prices climbed higher. It’s a similarly quiet week up north with Thursday’s November inflation readings the main event. Today, Canada’s wholesale trade report for October is due with analysts predicting that sales will pick up 0.6 percent. The loonie is lower by more than 3 percent following last Wednesday’s Federal Reserve meeting, keeping intact the very strong uptrend for USD/CAD which began in May.


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