Summary:

• USD hit with a strong wave of selling after Mnuchin comments
• Slightly soft data does little to help stop the sell-off
• Oil spikes higher as DOE shows 10th consecutive drawdown before falling back
• Fed chair expresses his view on blockchain and Bitcoin
• Preview for ECB meeting tomorrow at 12:45PM

It’s been a bad day for US dollar bulls with the greenback getting with a strong wave of selling and falling across the board. Several significant levels have been reached in USD pairs with the GBPUSD moving above 1.42, EURUSD breaching 1.24 and the USDJPY falling down to 109. The world’s reserve currency has been trending lower for some time now with comments today from the US Treasury secretary and the Commerce secretary adding to the declines.

 There’s been a batch of US data released in the past hour, which on the whole is perhaps mildly disappointing and certainly offers little support for the tumbling US dollar. Existing home sales for the month of December fell from 5.81M previously to 5.57M – well below the 5.72M expected. Shortly before the housing data was published we got the flash PMIs for both the manufacturing and services sector. 

 The latest inventory data from the US has provided a boost to the oil price with Brent Oil jumping by around 75 cents in the  hour since the release. The weekly DOE number came in at -1.1M which keeps the run of drawdowns going, with the past 10 releases now all showing drops. However, this rally ran into some resistance around $70 and given that US production rose once more there is a case to be made for this move to be a false one. 

Bitcoin has been remarkably calm recently despite quite adverse reports coming from South Korea, one of the key places for the cryptocurrency industry. From a technical point of view sellers seem to still keep control as the price is hovering below a key short-term resistance. We earlier got some remarks with regard to the blockchain technology as well as Bitcoin delivered by the next chairman of the Federal Reserve – Jerome Powell.

 The ECB meeting is the most awaited market event in January. Bank will need to address speculations about a termination of the QE program at the end of September and a timing of the first interest rate hike. What can we expect from this potentially major event? Read our preview here or watch a short video here.