Forex headlines for July 16, 2014:
- Bank of Canada says its outlook on rates is “neutral”
- BOC cuts Q3 growth estimate, pushes back estimate for return to full capacity by 3 months
- Poloz: Blames higher inflation on temporary factors
- Poloz: If investment and growth don’t improve, inflation will fall below target again
- Yellen stressed that the employment picture showed “more distress” than the unemployment rate signals
- Beige Book: Sees better consumer, manufacturing and optimism across the board
- “Serial disappointment” the theme at the Bank of Canada
- July 2014 NAHB housing market index 53 vs 50 exp
- June 2014 US PPI final demand 0.4% vs 0.2% exp m/m
- June US industrial production 0.2% vs 0.4% exp m/m
- May 2014 Canadian manufacturing sales 1.6% vs 1.0% exp m/m
- Fed’s Williams says “there’s still a way to go” for US labor market to heal
- Fed’s Fisher: Markets are overshooting in my view
- US may raise interest rates sooner than early next year says Fisher
- ECB’s Weidmann warns of new flare up in eurozone crisis
- There is no indication from ECB that we will run an ABS program says Nowotny
- London gold fixings due to be overhauled
- S&P 500 up 8 points to 1981
- WTI crude up $1.46 to $101.42
- Gold up $4.60 to $1298
- CAD leads, NZD lags
The Bank of Canada coined the term “serial disappointment” in their latest statement as a way to express the repeated false dawns in growth in Canada and elsewhere. They repeated it a dozen times in the press conference and made it very clear they’re in wait-and-see mode for the long haul. But the market was focused more on the short term and the clear shift to neutral from a wishy-washy sorta-neutral and less worries about disinflation gave the loonie a jolt after a quick fall. USD/CAD rose as high as 1.0794 the shrank bakc to 1.0724 before settling close to 1.0750.
The euro was the other bid story and it’s tough to name a catalyst for the relentless weakness. European stock markets were very strong as fear about Portugal faded but it didn’t translate to euro strength, just the opposite. EUR/USD did most of the falling in Europe but sagged again to 1.3521 in US trading. All eyes on the 1.35 barrier.
USD/JPY consolidated the moves from earlier in the week, which is somewhat of a victory for the bulls. But there wasn’t much to trade in the intraday with a chop in the 101.64 to 101.79 range.
Cable was choppy on the jobs numbers in Europe but we end up back where we were before they were released at 1.7138. The better interest is in EUR/GBP as it continues to carve out two-year lows.
AUD/USD was in recovery mode after an overnight fall to 0.9330. The bottom was V-shaped and gains accelerated in US trading. We finish at the US high of 0.9366.
