Forex news for New York trading on February 27, 2017:

  • January prelim US durable goods orders +1.8% vs +1.7% expected
  • Trump: I can't do tax plan until health plan costs known
  • Trump says budget will be focused on 'public safety'
  • White House to offset defense spending rise with cuts elsewhere
  • Fed's Kaplan: Confident US GDP growth will exceed 2% in 2017
  • Fed's Kaplan: Optimism not yet turning into business activity
  • Kaplan repeats Fed should hike sooner rather than later
  • Atlanta Fed bumps up Q1 GDP forecast to 2.5% from 2.4%
  • February Dallas Fed manufacturing index 24.5 vs 19.4 expected
  • January US pending home sales -2.8% vs +1.0% expected
  • ECB QE count: Bought €16.293bn vs €17.185bn prior
  • Mexico prepared to walk away from NAFTA talks if tariffs on the table

Markets:

  • Gold down $2 to $1255
  • WTI crude up 8-cents to $54.06
  • US 10-year yields up 5.5 bps to 2.37%
  • S&P 500 up 2 points to 2369
  • DJIA in line for 12th consecutive gain
  • EUR leads, JPY lags

If you would have expected the US dollar to hit a speedbump on weak durable goods and Trump slowing down the timeline for a tax plan, you would have been right; at least for awhile. But if you had predicted the US dollar would later dismiss all those concerns and rally to some of the best levels of the day, you would be sage.

That's what happened Monday. USD/JPY tested the Asian low of 111.93 on the series of disappointing headlines but a wave of bids materialized there to take the pair up to 112.82 in US afternoon trading. The one thing the market liked was Trump talking major infrastructure spending. That flies in the face of reports last week that he might delay infrastructure until 2018.

EUR/USD rose as high as 1.0630 in US afternoon trading only to give up nearly all the daily gains in a drop to 1.0580.

Cable was in focus at the open on talk of another Scottish referendum but confirmation was slow in coming and GBP rebounded from technical support at last week's low up to 1.2480 from 100 pips lower. But it shed 50 pips late as the US dollar rebounded.

A big reason for the dollar bid was a rise in Treasury yields. Gundlach talked about a bond rally Friday but it didn't come today. The idea is that Trump will disappoint but with the President instead seeming to pivot his speech toward Obamacare and the military, it doesn't look like it will be the headline risk that was touted.

Elsewhere, USD/CAD chopped around 1.3110 before a late jump to 1.3155 that was exaggerated by a late skid in oil.