Forexlive Asia-Pacific news wrap: Dollar off to a good start to the trading week on tax reform

Author: Greg Michalowski | Category: News

Forex news for Asian Pacific traders on December 4, 2017.

A snapshot of other markets is showing:

  • Spot gold down -$5.89 or -0.45% at $1274.70
  • WTI crude oil down -$0.43 or -0.74% at $57.93
  • US yields are higher.  2 year 1.802% up 3 bp. 10 year 2.40%, up 3.9 bp
  • US stock futures are higher with S&P mini's up 16.5 points and the Dow futures trading up 232 points.
  • Asian stocks are mixed: Japan Nikkei is down -71 points or -0.31%.  Shanghai composite is up 2.4 points or +0.07%.  Australia's S&P/ASX down -4.1 points or -0.07%.  HK Hang Seng up 201 points or +0.69%
The story in the Asian session was the weekend development.
  1. The Flynn guilty plea reported on Friday was less than first thought as he was not instructed to contact Russia by Trump before the election but after (or so it now seems).  
  2. The Senate passed their version of tax reform on early Saturday morning. Next step bringing the House and Senate version together and coming to an agreement on a united tax reform bill. 
Both developments were dollar bullish and the major currency pairs each opened higher. 

Looking at the winners and losers in the Asian session, the USD had the biggest gains vs. the CHF, and NZD and JPY.  The CHF and the JPY were safe haven bids on Friday's news, and those flows were reversed the most today. The NZD is just a currency which continues to have problems on any rallies.  So it continues to suffer.

For the USDCHF, the pair rallied up toward the near converged 200 and 100 hour MAs at 0.9828-32 area.  The high so far has reached 0.98285. A move above will be needed to keep the momentum going.

The USDJPY took out Friday's high at 112.868, but only by 2 pips (to 112.886). The failure to ignite any further upside momentum, led to a rotation back lower. However, the range has only been about 25 pips from high to low, with a number of swing lows coming in at 112.63.  So as the day progresses, those two levels will be eyed for breaks.  

The GBP is also more bullish in trading so far today. Like other currency pairs, the GBPUSD gapped lower at the opening on the USD strength, but surged higher on the back of optimism of Brexit talks that will take place later in the London session. That sent the GBPUSD pair up from a low of 1.3423 (was the 38.2% of the move up from the November 28th low - see post here), to a high of 1.3512. The pair has since retreated back toward the day's midpoint of the range at 1.3468.  

I am back for the NY session, so off for a few hours of sleep.  Good fortune with your trading.