Daily Currency Update

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The U.S. dollar falls following positive numbers in China and Europe.

USD - United States Dollar

Just as we were expecting a peaceful period over the holidays, President Trump tweeted that he would restore steel and aluminum tariffs on goods imported from Argentina and Brazil this morning. According to Trump, his rationale was that the tariffs would be in return for the weakening of their currencies. He also attacked the Fed again, saying that they should lower rates, so that countries such as Argentina or Brazil no longer take advantage of the strong U.S. dollar by further devaluing their currencies. The Argentinian and Brazilian currencies are freely traded, and they have been in devaluation mode over the last few months, especially the Argentinian Peso, which has been punished for its weak economic growth and the expectation that its new government will default on outstanding bond payments.

Later this morning, the ISM's manufacturing report will be released and it will provide critical insight on whether things are improving or getting worse in the U.S. manufacturing industry.

Key Movers

Regarding China's retaliation to the U.S. bill supporting pro-democracy movements in Hong Kong, a Chinese Foreign Ministry spokeswoman said sanctions would be put on U.S. human-rights organizations operating in China. The statement promised that China would take, "…further necessary actions," without providing further details. On the economic release side, China showed stronger output after the Caixin manufacturing index rose to 51.8, while the forecast was 51.5. The good news in the Chinese economy along with positive news in the Euro-zone factory activity (which rose to a three-month high last month) have helped the Euro to increase against the U.S. dollar, Canadian dollar, and British Pound by 0.15, 0.32 and 0.24 percent respectively at the time of this writing.

Expected Ranges

USD/CAD: 1.3266 - 1.3311 ▲

EUR/USD: 1.0989 - 1.1053 ▲

GBP/USD: 1.2900 - 1.2975 ▲

AUD/USD: 0.6788 - 0.6810 ▲

NZD/USD: 0.6465 - 0.6500 ▲