Dollar Gains as Positive Data Continues

The U.S. dollar firmed as economic data continued to surprise to the upside and yields edged higher. The Fed released minutes from the December 14 FOMC meeting which indicated that the Fed expected economic growth to pick up somewhat, but the improving economy was not enough to alter QE. The minutes showed that officials saw slow progress at meeting the Fed's dual mandate and that hiring was 'still sluggish'. U.S. factory orders for November unexpectedly rose by +0.7% vs. an expected decline of -0.1% and prior -0.7% (revised higher from -0.9%). This continued the positive economic data stream out of the U.S. resulting in further dollar strength. EUR/USD reversed earlier gains and news of flooding in Queensland continued to weigh on the Aussie as it is likely to negatively impact exports and therefore GDP growth and monetary policy. AUD/USD fell to session lows around 1.0030 and EUR/USD plunged below 1.3300 as the dollar gained.

U.S. equities were mixed with the Dow Jones Industrial Average climbing out of negative territory late in the session to finish the day higher by about +0.18%. The S&P 500 spent much of the day in the red after an initial start higher and ultimately closed down by about -0.13%. Commodities suffered losses as the dollar strengthened with gold and silver falling by roughly -2.40% and -3.01% respectively and oil declining by about -2.55%. U.S. 10-year Treasury yields were relatively unchanged on the day.

On the data front for the upcoming Asia/Pacific session is November Australia HIA new home sales, China's HSBC services PMI for December, and due out of Japan is December monetary base, vehicle sales, and office vacancies.

Source: ActionForex.Com