Forex News: America Is Open for Business!

US President Donald Trump’s speech at the Davos forum was well received. He is optimistic on the US economy and clearly ready to make deals. He says America is open for business, the world is witnessing a resurgence in the US that will lead to strong growth long into the future. According to him, and I tend to agree, there has never been a better time to invest in the US.
A keynote in his speech was regulation. He says the days of too many regulations are over. Regulations are good, they keep people safe and business fair, but over-regulation has crippled the country. He also reiterated his stance of America 1^st but with the caveat all leaders should put their nations 1^st and that together, through cooperation, all could be stronger.
He also spoke about trade. Trade he says should be free, but it should also be fair and reciprocal. Nations should not be allowed to circumvent systems put in place for the good of all. He’d like to enter bilateral deals with individual nations but would consider group negotiations if it was in the interest of all. America is his priority, but America is not alone.
Meanwhile the first read on 4^th quarter GDP came in a bit weaker than expected but was largely shrugged off by the market. The 2.6% headline was below the consensus 2.9% but still above average and expected to see upward revisions over the next two months. Regardless anticipated revisions yesterday’s leading indicators was strong at 0.6% and continues to support the idea of strong expansion in the US.
The EUR/USD continues to see upward pressure in the wake of the ECB meeting on Thursday, but bulls are facing a tough battle. Comments from President Trump released to the market over the past two days, including his analysis of Mnuchin’s “weak dollar” remarks, have put a bid back in the dollar and capped gains. Friday’s early action saw the pair move back up from the 1.2400 support level creating a large candle with visible upper wick. This candle is within the previous day’s range and confirms the presence of resistance at 1.2500. In the near term the pair may continue to move sideways in consolidation with a target of next Wednesday’s FOMC meeting for possible reversal or continuation.

The greenback fell versus the loony on weaker than expected GDP. The pair has been in downtrend for a couple of months and looks like it could move lower. Canadian economics have been showing signs of improvement in lockstep with the US, no surprise there, and driving the move. If US data continues to come in under expectation and/or the FOMC fails to meet expectations the pair could move down to test long term support at the bottom of a long-term trading range near 1.2100.

The greenback also versus the Aussie dollar and for similar reasons. Australian economics have been on the hot side of expectation and leading the market. The AUD/USD has been in uptrend since hitting bottom in December and indicated higher.

The caveat is that the indicators are a bit weak and have been weakening, divergent from the highs, and indicate the possibility of reversal. Once again the best target for such a move is next Wednesday with the FOMC release.