01/02/2017 - Trumps Advisers Talk Down Dollar 

USD

The dollar was on course for its worst start to a year in more than a decade on Tuesday after a trade adviser to President Donald Trump added to signs the new administration may be trying to talk its currency down.

Suggestions by the head of Trump’s new National Trade Council, Peter Navarro, that Germany was benefiting from a "grossly undervalued" exchange rate drove the euro 0.6 percent higher and sparked a broader fall in the dollar.

Peter Navarro, the head of the U.S. president's new National Trade Council, told the Financial Times the euro was like an "implicit Deutsche Mark" whose low valuation gave Germany an edge over the United States and its European Union partners.

Navarro's comments are the latest from Washington that may deepen growing unease over the outlook for global trade, after Trump himself told the Wall Street Journal two weeks ago that the dollar's strength against the Chinese yuan "is killing us". He also went on to say “Germany was one of the main hurdles to a US-EU trade deal.

GBP

The Bank of England figures on Tuesday showed consumers slowed the pace of borrowing in December for the first time in five months, an early sign that households might be reigning in their spending as inflation rises, after initially holding steady after the data, the pound sank.

MPs in Britain's lower house of parliament are starting a two-day debate over the triggering of formal negotiations that will take the country out of the European Union.

British Prime Minister Theresa May's Brexit bill is expected to survive weeks of intense parliamentary scrutiny that begin in the House of Commons on Tuesday, despite pro-EU lawmakers' attempts to force the government to rethink its strategy.

May's government is seeking approval for a law giving her the right to trigger Article 50 - the legal starting point for leaving the EU - after the Supreme Court ruled last week she could not take that decision unilaterally.

It is expected to use its majority to resist any substantial amendments to the bill, facing down opponents of a "hard Brexit" that will prioritise immigration controls over membership of Europe's lucrative single market.

Key Announcements

09.30 – GBP – Manufacturing PMI; Forecast at 55.9 against a previous of 56.1

13.15 – USD – ADP Non-Farm Employment Change; Forecast at 165K against a previous of 153K

15.00 – USD – ISM Manufacturing PMI; Forecast at 55 against previous of 54.7

15.30 – USD – Crude Oil Inventories

19.00 – USD - FOMC Statement

19.00 – USD – Federal Funds Rate; no change expected