Forex news for North American trade on December 13, 2019:
- China says first phase of trade deal with US agreed
- Trump says Phase One deal agreed with some tariffs lowered
- US November advance retail sales +0.2% vs +0.5% expected
- Fed's Clarida: Sees no signs of the US consumer pulling back
- Lighthizer: US/China aiming to sign deal 1st week in January
- Baker Hughes total rig counts remain unchanged at 799
- Japan to boost 2020 GDP estimate to 1.4% from 1.2% in July
- Fed's Williams: We've got economy on a strong footing and good growth
- US October business inventories +0.2% vs +0.2% expected
- US import price index for November 0.2% versus 0.2% estimate
- CFTC Commitments of Traders report: GBP shorts trimmed but not as much as you might think
Markets:
- Gold up $6 to $1475
- US 10-year yields down 7 bps to 1.82%
- S&P 500 float at 3168
- GBP leads, AUD lags
- WTI crude oil up 61-cents to $59.79
Confusion was the story early in North American trade as yesterday's reports of a US-China deal were not confirmed by Beijing. The eerie silence ramped up on reports highlighting things that wouldn't be included and then Trump threw fuel on the fire by saying the 50% rollback on $360B in tariffs was wrong.
Eventually Chinese officials said there was a deal and Trump confirmed it. The main detail is that December 15 tariffs will be averted but that tariffs would only be rolled back by 50% on $112B of goods. That sparked a sell the fact trade. The risk aversion was more-pronounced in bonds and AUD/USD than in stocks, probably due to year-end effects.
AUD/USD earlier crested above some critical technical levels including the 200-dma but fell back lower to 0.6870 and finished near the lows of the day. NZD fell in step. CAD also slumped early but it was buoyed by a rally in WTI crude above $60.
Cable was surprisingly quiet as it consolidating around 1.3335. The range was just 60 pips in New York trade as bids at 1.3300 held firm but buyers were reluctant to take it above 1.3360.
USD/JPY initially fell 30 pips on deal confusion then rallied when a deal was announced only to sag back to fresh lows on the details. In sum, it finished the day virtually unchanged at 109.35.
The euro weakened to 1.1120 as it gave back all the UK vote gains. It's stuck in a tough spot as a carry trade funder and this is another example of its inability to rally; even on 'good' news.
