Not my most favourite person right now. I was sitting here looking at EUR/USD as it traded the big option expiry thinking this is a short as the buck is going bid all around. Then that clown popped up and I grabbed the comments. 30 seconds later it’s trading 1.2260 from 1.2290. Son of a….
Anyway, it looks like we’ve had some decent options action going on today with that large EUR/USD expiry pegging the majors down. Now the leash is off USD/JPY has run back to the highs around 119.50.
USD/CHF has benefitted also as it has a look at the highs at 0.9820. AUD/USD tickling support at 0.8150/45
Reuters reports, citing an unnamed US official, that an investigation found that North Korea was responsible for the Sony hack and also found there could be a Chinese link, possibly by using Chinese servers.
I understand this was one of the slides presented with the US investigation.
Surely the sources are legit
Some traders have pointed out to me that USD/CAD moved before the CPI and retail sales numbers were released. It’s not wholly unusual for the market to move just before economic data when the market is thin but in this case USD/CAD surged before the data, which is exactly what you’d expect before the inflation numbers were soft.
Statistics Canada has launched investigations in the past after similar moves but never got to the bottom of them.
USDCAD fishy move ahead of CPI
The selling immediately after the data also indicates some traders with inside info might have quickly cashed out an early Christmas present.
- Says there should be no rate rises while the inflation outlook is sub 2%
- FOMC created unacceptable downside inflation risks
- Failure to act risks harmful inflation downslide
- Hard for fed to respond if inflation gets to low
Narayana Kocherlakota was a dissenter on the FOMC and sounds very bitter about things. He’s due to step down in 2016 and is not a voter next year
- Says EU investment plan to have more fire power by March
- Considering an energy project for France,Spain and Portugal
- Private investors will not lose money, the plan is credible
- Don’t expect all EU countries to participate in plan
EU head Jean Claude Junker is still sales pitching his investment project at a one day summit in Brussels. Talking to MNI he says that they already have the first project in the pipeline for the €315bn fund by way of creating an energy connection between France, Spain and Portugal.
As far as investors go, Finland has already stuck two fingers up at putting in money
So get ready for more EU firepower in the spring
EU firepower! Coming March 2015
The past two-days were the best two-day rally in the S&P 500 since 2011 so any kinds of gains today are a victory. The S&P 500 opened 2 points higher to 2.63.
Even if conditions are overbought in the short term, it’s very tough to stop at stock market rally at this time of the year and through the first couple (that means two!) trading days of 2015.
USD/CAD solid despite soft inflation
If the market was looking for a reason to sell the Canadian dollar, it came in the form of a weak CPI report with core inflation up just 2.1% compared to 2.4% expected.
Immediately after the report, USD/CAD jumped to 1.1635 from 1.1600 but has virtually retraced the gain. It’s a recurring them in the final quarter; since Sept 30 oil is down 40% and the Canadian dollar is down just 4%.
That could change in the year ahead. USD/CAD hit a five-year high of 1.1672 on Tuesday and the long-term technical picture will be crippled if the mid-2009 high of 1.1725 breaks and oil prices remain in the gutter.
USDCAD weekly chart
The Canadian dollar is benefiting somewhat from ties to the United States and optimism about US growth but the flip-side is that if the US stumbles in 2015; it will be a painful year for the loonie.
- USDJPY 117.00 (USD 4.8bln) 118.50 (USD 1.3bln) 119.00 (USD 2.3bln) 119.50 (USD 1.2bln) 120.00 (USD 6.6bln)
- EURUSD 1.2200 (EUR 1.5bln) 1.2250-60 (EUR 3.1bln) 1.2300 (EUR 10bln) 1.2350 (EUR 6bln)
- GBPUSD 1.5550 (GBP 300m) 1.5600 (GBP 335m) 1.5700 (GBP 1bln)
- USDCHF 0.9750 (USD 877m) 0.9800 (USD 525m) 0.9850 (USD 500m) 0.9900 (USD 1.9bln)
- USDCAD 1.1500 (USD 775m) 1.1600 (USD 1.1bln) 1.1650 (USD 437m) 1.1700 (USD 480m)
- AUDUSD 0.8185 (AUD 1.4bln) 0.8200 (AUD 1.1bln) 0.8255 (AUD 1.4bln)
- NZDUSD 0.7600 (NZD 1.7bln) 0.7750 (NZD 450m) 0.7770 (NZD 280m)
- EURGBP 0.7750 (EUR 300m) 0.7865-75 (EUR 400m) 0.7915 (EUR 350m)
Note the very large EURUSD expiries. GBPUSD, USDJPY and AUDUSD nearby too.
For further guidance on the impact of these expiries read this
Forex news from the European morning session 19 December 2014
It’s been a typical pre-Xmas session with enough action to keep prices ticking over but with a distinctive feel of apathy too. But certainly the highlight has been Adam being awarded FX Street’s Forex Person of the Year award. Top work fella.
Marketwise we’ve seen USDJPY try and clear 119.50 a couple of times but spent most of the session around 119.35 while USDCHF had a look over 0.9820 from 0.9790 before also retreating.
EURUSD has huge option expiries at 1.2300 and 1.2350 and the early move higher failed at 1.2298 from 1.2280 and has since dropped to 1.2253 while GBPUSD, also with a large expiry at 1.5700 capped at 1.5683 to drift off to 1.5617 so far.EURGBP had a look at 0.7830 support but has since rallied above 0.7850
USDCAD bounced from 115.70 but failed at 1.1602 and has spent most of the session at 1.1595 while AUDUSD continues to trade between 0.8150-0.8200 and NZDUSD has similarly been quiet between 0.7750-0.7800.
It’s Friday and the last real day of trading but most are already out to lunch. Let’s see what our friends across the pond can breathe into it.
- Prior 2.4%
- -0.4% vs -0.2% exp m/m. Prior +0.1%
- Core 2.0% vs 2.0% prior y/y
- -0.3% vs +0.4% prior m/m
- BOC Core 2.1% vs 2.4% exp. Prior 2.3%
- -0.2% vs +0.1% exp m/m. Prior +0.3%
USD/CAD runs up t the days high at 1.1634 as inflation comes in much softer than expected. The drop in the core number is especially noteworthy. Update: It should be noted that the non-BOC core held steady at 2.0%
Gasoline the main driver dropping 5.9% y/y following a 0.6% rise on October. It was down 7.5% on the month and posted a 5 straight fall. Big falls seen in gasoline but other energies saw rises. Nat gas +14.7%, electricity +3.6% y/y
Canadian CPI data 19 12 2014
With gasoline prices dropping rapidly we need to look for the pass through effects into the rest of the economy.
On the plus side for the BOC, the fall in the core will somewhat validate BOC head Stephen Poloz and his view of lower inflation.
Canadian CPI 19 12 2014
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