North American Summary and Highlights 16 Jan
Overview - The USD was lifted after Trump suggested Hassett would not be nominated for Fed Chair.
North American session
The USD received a lift along with front end UST yields when Trump stated that Kevin Hassett, who had been the favorite to be nominated as the next Fed Chair, might remain in his current position as director of the NEC. This led markets to see a reduced threat to Fed independence. Later Fed Governor Bowman, also on the shortlist for Chair, expressed dovish views. US data had little impact December industrial production was stronger than expected with a rise of 0.4% but January’s NAHB homebuilders’ index unexpectedly slipped to 37 from 39.
EUR/USD fell from a high of 1.1627 to a low of 1.1585 before correcting to near 1.16. USD/JPY however was little changed near 158. Before Trump’s remarks, AUD/USD had already edged below 0.67 and USD/CAD had edged below 1.39. The moves were modestly extended after Trump spoke.
European morning session
The USD edged a little lower through a largely newsless European morning, with the JPY the best performer of the majors. USD/JPY tested 158 before settling around 30 pips lower at 158.10. The riskier currencies made more modest gain of 0.1% or less, with EUR/USD gaining just around 5 pips to 1.1615.
The best performer of the morning was the NOK, with EUR/NOK dropping 4 figures to 11.71, though with no obvious trigger beyond some modest gains in the oil price.