Trump Tax Talk Reinvigorates Dollar to Gains Against Most G-10

  • Trump: ‘phenomenal’ taxes announcement may come in 2-3 weeks
  • Dollar-yen extends gain off weekly low, supports broader USD

The dollar was trading near its session high after President Trump told airline officials that there will be some news on the tax front in the next two to three weeks, reviving optimism that fiscal stimulus could juice the U.S. economy and reigniting the recently stalled “Trump trade.”

The Bloomberg dollar index was up ~0.25%, with gains paced by dollar-yen, which surged more than 1% to a high of 113.30, extending its rise from the weekly low of 111.60. Treasury yields gained and the Dow Jones Industrial Average rose to a record after Trump’s comments.

Dollar-yen remained near its session high, with gains spilling into other currency pairs, after White House officials said that currency manipulation was not at the top of the list of discussion topics for the president and Japan PM Shinzo Abe, who will meet Friday in Washington.

The dollar-yen rebound alleviated broader dollar pressure as bets for a drop toward 110.00 were unwound. USD saw stop-loss driven gains after offers at 112.50/60 were absorbed, said traders in London and New York, who asked not to be identified because they are not authorized to speak publicly.

Trading flows and liquidity were slightly impacted by a storm with potential for more than a foot of snow on the U.S. Northeast, causing flight cancellations and travel delays.

  • USD/JPY trading at ~113.12 and offers are positioned around technical resistance at the Feb. 3 high of 113.45, traders said; USD is also testing resistance on Ichimoku chart at 113.38, a breach may open move toward the cloud top above 116.00
  • EUR/USD fell to a fresh low 1.0651, testing bids at 1.0650, with further bids stacked ahead of 1.0600 where they have been all week, according to traders in London and Europe
  • GBP/USD trading near 1.2500 after falling back from its high at 1.2582 as the USD tone improved; offers are in place above 1.2600 while bids are positioned ~1.2445, traders said
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