Forex news for October 16, 2014:
- Bullard says Fed should consider delay in ending QE
- US initial jobless claims 264k vs 290k exp
- September 2014 US industrial production 1.0% vs 0.4% exp m/m
- US Oct NAHB housing market index 54 vs 59 exp
- October 2014 US Philly Fed business index 20.7 vs 20.0 exp
- Venezuela has requested extraordinary OPEC meeting
- August 2014 Canadian manufacturing sales -3.3% vs -1.6% exp m/m
- ECB’s Nowotny says Euro economy shows clear signs of weakening
- ECB looks to lower the haircut on Greek government bonds
- Plosser says volatile market not significant enough to throw off US economy
- Yellen mum at meet and greet in Chelsea, Mass
- Yale student who was in Liberia being treated for ebola-like symptoms
- World Bank’s Kim says closing borders not an effective strategy for ebola
- Spanish priest who worked in Africa with ebola patients taken to hospital
- Kocherlakota: Labor market is distressingly weak
- Goldman Sachs: Market moves don’t match economic reality
- One of the world’s largest equities managers says he’s looking to buy stocks
- Gold down $2 to $1239
- WTI crude up 88-cents to $82.65
- S&P 500 flat at 1863
- GBP leads, AUD lags
Markets had another bout of panic but it peaked very early in the US morning and slowly ebbed afterwards. Sentiment slightly improved on the excellent data on jobless claims and IP but it was Bullard who marked the most dramatic turnaround.
He was scheduled to speak later but appeared on Bloomberg TV and dropped a bomb. He said “a reasonable response” from the Fed would be to delay the taper. He didn’t necessarily say the Fed should do it but it wasn’t something that was even on the table and that the comment came from a Fed hawk was a shock.
The market reaction was immediate and dramatic. Stocks surged to erase losses and bonds tumbled. The US dollar moves were less impressive but the idea the Fed could keep printing opens the door to all kinds of dovish policies and could limit USD strength.
A softer US dollar continued to weigh, with the exception of USD/JPY which was boosted by risk appetite. EUR/USD tracked up to 1.2835, about a cent higher than at the start of US trading.
Cable was near a session high (at the time) when the Bullard news crossed. It climbed in a steady move to 1.6090 from about 1.6000 thereafter. Yesterday’s high of 1.6072 stalled the advance for a period but now offers ahead of 1.6100 are the spot to watch.
The Canadian dollar was an outperformer as USD/CAD fell about 100 pips down to 1.1250 but bids just below that also held yesterday’s low are supporting the pair. AUD and NZD were also buoyant but haven’t mounted a serious challenge of yesterday’s highs.
Oil fell through $80 briefly but surged back and spiked to nearly $85 very briefly before tailing back to $82.73. Gold continues to remain quiet and, curiously, couldn’t find a bid even on the idea of more QE.
ebola is the main background story and is starting to affect markets
