Forex news for December 12, 2014:
- December 2014 US Michigan consumer confidence flash 93.8 vs 89.5 exp
- U Mich 1-year inflation expectations 2.9% vs 2.8% prior
- Fitch downgrades France to AA, outlook stable
- Fitch and S&P affirm UK ratings
- US Nov PPI -0.2% m/m vs -0.1% expected
- November 2014 Teranet/National bank HPI -0.3% vs 0.2% prior m/m
- Stamp duty change will support the housing market says Carney
- Norway feeling the pinch over oil prices
- BOJ rejects the idea additional stimulus is needed to counteract oil
- Fed’s Kocherlakota stepping down in 2016
- Former Fed Gov Mishkin: The Fed is right to stay patient
- Italy’s Padoan says investment is much needed in Europe
- Baker Hughes US rig count 1893 vs 1920 prior
- Gold down $5 to $1223
- WTI crude down $2.19 to $57.76
- CHF leads, NZD lags
- US 10-year yields down 8 bps to 2.08%
- German 10-year yields fall to record 0.62%
- US 5-year breakevens fall 8.5 bps to 1.15%
- S&P 500 down 33 points to 2001
It was the worst week for the US stock market since May 2012. That doesn’t sound right after the rout in October but it came on the heels of a record on non-farm payrolls just a week ago.
The trigger for everything has been oil. Sentiment was solid today in early trading but when oil broke, that’s when the wheels started to come off.
Don’t underestimate the bond market either. Yields are plunging and breakevens are signalling the Fed will be making a mistake if it hikes. That sets up a very interesting FOMC decision on Wednesday.
USD/JPY hit the highs of the day on the U Mich data with the highest sentiment in 8 years and higher inflation expectations but the market doesn’t have a lot of respect for that report and after touching 119.21, USD/JPY began to slide all the way to 118.20 in a quick move. It eventually bounced to 118.64.
EUR/USD was surprisingly steady in a gradual climb to 1.2484 at the UK close. It backed off to 1.5456 from there, finishing up just 15 points in US trading but up 45 pips on the day and near the top of the leaderboard.
The better drama might be in EUR/CHF, which is pinned to the floor at 1.2008-1.2010 as the ECB contemplates sovereign QE.
There isn’t much to say about cable. It climbed quickly to 1.5740 but offers ahead of 1.5750 capped the move quickly and it was drop back to 1.5696, just enough to hit some stops. Then it bounced right back to 1.5735. It’s been that kind of chop in cable lately.
The Canadian dollar was surprisingly buoyant given the fall in oil but there was a reason for it. The FT reported Canadian oil company Talisman is the sights of Spain’s Repsol in an $8 billion deal. USD/CAD rose as high as 1.1591 in Europe but wilted to 1.1520 before a last gasp to 1.1573.
Have a great weekend.
