Forex today: dollar under pressure as focus stays with US Congress

Forex Today

Forex today had the dollar in a mess as investors look for an exit with the prospects of a possible US government shutdown.

The US10yr yields actually made fresh 10-month highs to 2.63% while the DXY ranged between 90.4080-90.9830 closing in the 90.5260 mark. US data was mixed with a miss in housing starts while the Philly Fed also while investors wait to see if Congress can pass a temporary funding extension and avoid a partial shutdown on Friday while the Democrats claim that they could block any such bill. 

The euro was higher and moved up to 1.2264, (yields slipped), the high before supply took the single currency back to 1.2220 support and for a close within the 1.2230's. The pound was firm in the London close and stayed bid throughout the NY session, albeit lacking fundamental data while markets await Friday's UK retails sales data. The cross was lower testing key support and a break with a convincing close below the 0.88 handle could be on the cards ahead f next week's ECB presser. USD/JPY hit a high of 111.48 before a low of 111.69 was scored. AUD/USD was moving back to 0.8000 from 0.7941 while the Kiwi held the 0.73 handle in consolidation.

Analysts at Westpac offered a review of the US data:

"US December housing starts fell 8.2%, a steeper than expected decline (consensus: -1.7%), though permits fell only slightly. The prior two months saw hefty gains due Hurricane related reconstruction so some pullback was likely. Bad weather might have exacerbated the decline too.

The Jan Philly Fed survey slipped to a still decent 22.2 from 26.2. New orders fell to 10.1 from 28.2, while the employment index moderated to 16.8 from 19.7 and prices paid firmed to 32.9 from 27.8, probably oil driven.

Initial claims plunged 41k to a 45-year low of 220k, though this data point tends to be more volatile at this time of year due to seasonal inclement weather and holiday related swings in hiring and layoffs."

Key notes from US session