Forex headlines for June 11, 2014:
- Cantor to resign as US House majority leader July 31
- US May budget deficit $130B vs $138.7B a year ago
- BOJ may raise view of overseas economies – Nikkei
- Hard landing in China a risk to the UK says BOE’s Broadbent
- Broadbent: Hikes likely to be gentle due to vulnerability in households
- ECB’s Dombret says banks must work to restart the ABS market
- Portugal lowers 2014 growth forecasts
- US Treasury sec Jack Lew says the US can’t afford to have millions leave the labour force
- Russia Ukraine gas talks fail
- Gold to lose its shine with central banks says the WGC
- EIA crude inventories -2.6m vs -1.9m expected
- EU leaders meeting to discuss “Most urgent measures” on energy security
- Former ECB member blames Germany for euro crisis woes
- US 10-year auction sells at 2.648% vs 2.640% WI
- Gold up $1 to $1261
- WTI crude up 10-cents to $104.45
- S&P 500 down 7 points to 1944
- NZD leads, EUR lags
It feels like change is in the air. The shock of Cantor losing his primary awoke the markets to political risks and sent stocks and USD/JPY lower. The follow through was negligible as we end the day pretty much where we started the US session but suddenly the market has something new to fear.
EUR/USD tried a rebound up to 1.3555 at the start of US trading but was pressured back down to 1.3527, down about 20 pips on the day and closing near the session low. The bigger story was EUR/JPY. After closing below the 200dma yesterday it broke the May low and fell to 137.88. You’d have expected some stops there but none were in the offing and the pair climbed back to 138.02.
The other new risk is the swift and powerful uprising in Iraq. The fall of Mosul and other parts of the country to insurgents has underpinned oil prices. The upside was minimal today but more signs of conflict could underpin a bid.
Cable rallied (mostly in Europe) on upbeat unemployment numbers but continued higher in the US after hitting buy stops above 1.6800. The high was 1.6811 which was just short of Tuesday’s top. The sellers stepped back in there and the paid slipped down to 1.6789.
The Canadian dollar was the star performer in US trading, knocking USD/CAD down to 1.0866 from 1.0890. Poloz is speaking on Thursday on financial risks and that could be a lead to some hawkish headlines.
World Cup kickoff tomorrow, get into it with our World Cup of FX contest.
