Forex headlines for April 17, 2014:
- Canadian March CPI 1.5% vs +1.4% y/y expected
- April Philly Fed +16.6 vs +10.0 expected
- US initial jobless claims 304k vs 315k exp
- Ukraine statement: 4 party statement call for illegal armed groups to be disarmed
- ECB’s Weidmann warming up to QE camp
- ECB’s Mersch says EU recovery taking hold but the pace is still modest
- Euro area facing exchange rate risks says Mersch
- Goldman Sachs sees 40% chance of ECB cut by June
- Kerry promises more sanctions if no action from Russia this weekend
- Gold down $9 to $1294
- S&P 500 up 2.5 points to 1864
- WTI crude up 75-cents to $104.51
- USD leads, NZD lags
Pre-long weekend trading was probably busier than most traders expected. The bond market was the catalyst with Treasuries leading a ‘risk on’ trade that boosted the US dollar. USD/JPY started around 102.10 and steadily climbed to 102.43. Gains accelerated after the Ukraine announcement but position squaring ahead of the long weekend was part of the equation.
EUR/USD felt the headlines from Mersch and Weidmann. The pair was under constant pressure after hitting 1.3865 in Europe. The highs came right around the time US traders arrived and it was a steady slide lower. Last at 1.3812.
Cable followed the same pattern as it drifted to 1.6790 from 1.6840. Yesterday’s lows held and that will be an area of interest (and potential stop hunts) in holiday thinned trading.
The inflation data from Canada was higher than expected and inclinations of rate cuts in the Great Frozen North are quickly becoming pipe dreams. Still, after a spike down to 1.0985 the pair found bids and tracked back to 1.1015, finishing close to unchanged on the day.
The Australian and New Zealand dollars, on the other hand, were caught in the broad USD rally. Both steadily declined with the kiwi as the underperformer.
Solid day for EUR/CHF as it chopped up to 1.2202.
Markets will be very quiet in the hours ahead. Eamonn has the day off but Ryan will be in later. Hopefully WW3 doesn’t break out.
