S&P 500 up 3 points to 1968, down 0.9% on the week
Gold up $2 to $1338
WTI crude down $2.26 to $100.67
CHF leads on the day, CAD lags
Friday was all about the Canadian dollar. The loonie has been the star for a few months but more than a few analysts noted that the fall from 1.12 to 1.06 had come too quickly. A retracement might be underway as USD/CAD shot 100 pips higher to 1.0732 after the jobs report. The initial move stalled ahead of offers at 1.0700 but once that broke it was a slow grind higher and we close near the highs.
Broader trades were dictated by stocks. The euro was surprisingly quiet in a 1.3590 to 1.3610 range despite a wild day in periphery stocks and the Portuguese bond market. Traders will look for some clarity over the weekend. EUR/USD finishes near the highs of US trading at 1.3609.
Cable took a step back but the bidders were waiting just below 1.71 and picked it up. Last at 1.7120. It’s been an indecisive week as the pound consolidates above 1.71.
USD/JPY was a dull trade and was in a 12-pip range for the entirety of US trading from 101.27-39. US 10-year yields were 2 basis points lower as the shorts continue to take a slap to the face (big or small) virtually every day. They’ll pray to the voodoo bond gods that Yellen throws them a lifeline next week.
AUD/USD started US trading just above 0.9400 and ends a few pips below. The stall and fall in the risk trade hurt but not for long.
The other big mover on the day was crude oil. The support from Thursday gave way in a dramatic fall down to 100.61. Rough week for the oil bulls and they’re in big trouble if $100 doesn’t hold, the 200-dma is also nearby at $99.94.
The USGS estimates earthquake a 6.8 magnitude 165km east of Honshu, Japan. The disasterous Fukushima quake was a 9.0 magnitude. A 6.8 would be a total disaster in most places but Japan is built to withstand earthquakes.
I don’t believe the recent broad-based uptick of inflation measures necessarily portends that inflation is going to get out of hand. Inflation expectations remain well-anchored. There is no sign that price makers, or the general public, anticipate a break with the experience of price stability the country has enjoyed for more than two decades.
I am still prepared to believe that the first-quarter contraction was an anomaly attributable substantially to weather, an inventory adjustment, health care spending, and exports. However, if there were temporary or unusual factors at work depressing the first quarter, then it is reasonable to expect that the lifting of those factors provided a bump in the numbers in the second quarter that may also have been transitory.
Atlanta Fed President Lockhart is speaking live on Bloomberg TV:
Welcomes the trend on the economy
If we look at the past few years, inflation has been too low
I want to see the economy to stand the test of time
I will tolerate some overshoot in inflation, beyond 2.5% one should be concerned and take action
Recent numbers may have some transient factors in them boosting inflation
Conditions will be right in H2 2015 for raising rates
The benefits of waiting to hike outweigh the potential costs
5.25% is near full employment but must look at other numbers
I emphasize part-time for economic reasons, which was poor in recent report
Lockhart is closer to the core than Bullard or Plosser and I’d expect his comments reflect what Yellen and Dudley are thinking. Fischer and the new governors could, however, swing the balance toward the hawks.
It will be very interesting what Yellen has to say on Wednesday but it might sound a lot like what Lockhart said.
A survey of the Fed’s 22 primary bond dealers from the NY Fed sees rate hikes beginning in Q3 2015 and reaching a high of 3.50% in 2017.
That’s down from a peak of 4.00% in the January survey but it still sounds wildly optimistic. The Fed, and evidently large parts of Wall Street, still see economy able to sustain those kinds of rates. I look at an economy that can barely get on its feet years after a crisis with the benefits of zero rates and near-endless QE.
If you start hiking rates you’re taking away two of the only tail winds the economy has — rising home and equity markets. Is the consumer going to carry the weight? Perhaps the oil boom will add to GDP but I don’t see how it could sustain Fed funds at 3.50%. I’d say rates at 1.00% in 2017 are much more likely.
There were some rumors but, wow, I didn’t see that one coming. What an offseason for that team, they won the draft lottery and then got the best player in the world. Lebron explains why in an article in Sports Illustrated.
Founded in 2008, ForexLive.com is the premier forex trading news site offering interesting commentary, opinion and analysis for true FX trading professionals. Get the latest breaking foreign exchange trade news and current updates from active traders daily. ForexLive.com blog posts feature leading edge technical analysis charting tips, forex analysis, and currency pair trading tutorials.
Find out how to take advantage of swings in global foreign exchange markets and see our real-time forex news analysis and reactions to central bank news, economic indicators and world events.
Our authors have years of experience in financial markets and provide diverse, thought-provoking updates relating to news about global macro events and the worldwide forex economic calendar, with frequently updated content that is educational for traders at all levels from beginner to novice that can help traders make better decisions about forex trading.
Our forex news focuses on G10 events, macroeconomic indicators, major equities indexes, treasury and bond yields from around the world, politics as it relates to forex trading and news from the FOMC as well as global central banks in, Europe and Asia.
HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.
ADVISORY WARNING: FOREXLIVE™ provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect's individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record. Past performance is no guarantee of future results and FOREXLIVE™ specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FOREXLIVE™ expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.