Forex headlines for September 25, 2014:
- September 2014 US Markit services PMI flash 58.5 vs 59.2 exp
- Fed’s Lockhart: US economy likely in shape for hike by mid-2015 but timing not certain
- Lockhart supports use of “considerable time” a bit longer
- BOC’s Carney: rate rises getting closer
- US Aug durable goods orders non-defense ex-air +0.6% vs +0.4% expected
- Japan’s health minister torpedos USD/JPY after saying he’s in no rush to push through GPIF bill
- BOE’s Shafik says market abuse has eroded public trust
- Italy to cut economic forecasts – RTRS
- S&P 500 down 32 points to 1966 (largest drop since July)
- Gold up $4 to $1221
- WTI crude down 21-cents to $92.51
- US 10-year yields down 6 bps to 2.51%
- JPY leads, NZD lags
What did we learn today? In truth, not much. I spent the whole day listening to talking heads try to explain what was going on in risk trades today and besides rumors of a hedge fund liquidating, I don’t know if anything made an ounce of sense.
For me, the PBOC is the big story. If Zhou is replaced it might be good, it might be bad but for sure it means uncertainty and uncertainty is the enemy of risk trades. That helps explain why AUD and NZD were the most-badly beaten up currencies.
Wheeler picked an incredible time to jawbone and sent the kiwi 2% lower. It was a relentless fall to 0.7922 from near 0.81 at the start of the day. AUD/USD too a trip down to 0.8782 from 0.8880 at this time yesterday. Most of the selling came long before US traders arrived and we’re only about 20 pips below where we started despite an additional 20 point fall in S&P 500 futures.
USD/JPY began to spill lower on the GPIF news and kept falling as risk trades wilted. The low so far is 108.52, which is importantly above yesterday’s low and suggests the dip buyers are still in control.
The euro and pound were relatively stable. The pound kicked higher on Carney’s comments after sliding in Asia/Europe. The high was 1.6341 but it slowly eroded back to 1.6313.
Strange day, I think cooler heads will prevail tomorrow but there’s a real lack of good information at the moment and the stock market closed at the lows — that’s not a great signal.
