Forex headlines for August 29, 2014:
- Canadian economy grew at 3.1% (annualized in Q2) vs 2.7% exp
- Canadian Q1 GDP revised down to 0.9% from 1.2%
- US PCE price index July m/m +0.1% vs +0.1% exp
- US consumption adj m/m -0/1% vs +0.2% exp
- August Chicago PMI 64.3 vs 56.5 expected
- August final University of Michigan consumer sentiment 82.5 vs 80.0 expected
- Probably no consensus on ECB bond buying at next week’s meeting – MNI
- UK says terror attack “highly likely” but no intelligence to suggest on is imminent
- ISTAT sees near-zero growth in Italy in Q3
- EU ready to “consider” more steps against Russia
- Ukraine rebels shelling Novoazovsk, Lysenko says
- JPMorgan cuts EUR/USD estimate
- Goldman Sachs cuts forecasts: Euro dynamics have “fundamentally changed”
- S&P 500 up 7 points to 2003
- Gold down $3 to $1287
- WTI crude up $1.34 to $95.89
- USD leads, JPY lags
The month-end flows out of dollars were the early story as the buck wilted but moments after the London fix it turned around in a big way. My thinking is that traders were waiting for those lows to get out of the way before getting into dollar longs for next week.
It was a rough ride all around but especially in USD/CAD. The better Canadian GDP data sparked some selling and the stops started to collapse below 1.0830 in a quick move down to 1.0811 which is almost precisely the 55-dma. Buyers stepped in there and later, after the fix, the US dollar buying started in earnest and it climbed all the way to 1.0873 and finished near the high of the day. The turnaround slapped a minor reversal on the chart.
USD/JPY cilmbed down to 103.82 as some minor post-opening weakness hit the S&P 500 but the it was a quick turn up to a session high at 104.11. Last at 104.05 as most of the dollar crosses finish at their best levels.
EUR/USD sellers faded the rise on the better CPI numbers as the pair failed to get above 1.3200 on a few attempts. From there it looked like we would wind down the week in the 1.3170-90 range but the post-fix selling hit and then stops below 1.3160 and a break of the barrier at 1.3150 send the pair down to 1.3134. We close near long-term lows.
The most bizarre move of all was cable. It followed a similar pattern against the dollar but way late in the day a mystery bid led to a quick jump to 1.6604 from 1.6568. Still no answers on that one and plenty of people scratching their heads.
NZD/USD continued to bleed lower and finished at 0.8360.
Have a great weekend!
