Forex headlines for October 9, 2014:
- Fed’s Fischer: Rates will probably rise ‘relatively slowly’ but it will be data driven
- Draghi: Euro area must urgently raise growth potential
- Draghi: ECB rates to stay low for long period of time
- Fed’s Fischer says forex rate will impact demand to some extent
- IMF says market valuations ‘stretched’ in major asset classes
- Fed’s Bullard hasn’t changed his view on Q1 2015 tightening
- Fed’s Williams: ‘Appropriate’ to raise rates in mid-2015
- French authorities have sealed a building in Paris over suspected cases of ebola – RTRS
- BOJ’s Kuroda: Will tell G20 Japan making steady progress toward 2% inflation target
- Nowotny says ECB not yet ready for QE, needs discussion, thought
- ECB’s Nowotny says deposit rate has become most important rate
- Fed’s Lacker expects inflation to gradually converge on 2%
- Initial jobless claims 287K vs 295K expected
- August 2014 US wholesale inventories 0.7% vs 0.3% exp m/m
- Goldman hikes US GDP tracking estimate by 0.3 pp after wholesale inventories
- August 2014 Canadian new housing price index 0.3% vs 0.1% exp
- Bank of England leaves interest rates unchanged at 0.5%
- Bill Gross says global economy is slowing
- Carl Ichan sends letter to Apple
- S&P 500 drops 40.48 points, or 2.06%, to 1928
- VIX up 23% to 18.60
- Gold up $4 to $1224
- WTI crude down $2.06 to $85.26 — lowest since 2012
- JPY leads, AUD lags
The full slate of central bankers were on the menu today but none of them said anything headline-grabbing. Draghi’s lower for longer comment got a bit of attention in the euro slide but overall the euro was in the middle of the pack.
It was a real struggle to make sense of the moves today but no one ever said markets were rational every day. I made a list of some of the contradictions because there’s no real Fed/economic theme that could explain everything.
What we can say is that the volatility is starting to spook the market. It was the largest decline in the S&P 500 since April 10.
FX wasn’t so bad as the general theme was a retracement of yesterday’s post-FOMC minutes gains. Technically, cable and USD/JPY stalled right at the 61.8% retracements of the FOMC minutes. USDCAD and EURUSD cruised through but didn’t complete the comeback.
I wrote earlier in the day before the moves really go going:
I’m not sure this is any more than a dead cat bounce but if you believe the market will do whatever hurts the most people, then a flight-to-safety and dollars today would really cream the fast money trade.
That turned into a lot of pain.
