Forex headlines for August 18, 2014:
- NAHB housing index 55 vs 53 exp — hits 7-month high
- Ukraine rebels launch counterattack with 1,200 rebels crossing from Russia
- June 2014 Canadian international security transactions C$-1.07bn vs C$5.0bn exp
- US Treasury staff working to provide Lew options on stemming tax inversions ‘as soon as possible’ – Treasury official
- Bitcoin squeezed on break below $500
- WTI crude down 83-cents to $96.52
- Gold down $6 to $1298
- S&P 500 up 17 points to 1971
- GBP leads, CHF lags
There was some trading action on a Monday for a change and that’s good news for everyone. The theme in stocks and bonds was a pure sort of ‘risk on’ but it was more nuanced in FX. The US dollar continues to benefit on good news days but it wasn’t universal.
Cable gapped higher at the open but didn’t do much once the action got going. The high was 1.6739 in Asia and neither European nor US traders could get back to that level. That’s probably a sign of the willingness to sell the pound despite a month of non-stop declines. Yet on the downside the enthusiasm was also limited. Cable bit into the opening gap, hitting 1.6713 in US trading but the selling quickly stopped and it pounced back up to 1.6733. Last at 1.6727.
The euro sagged lower and especially hit the skids after 1.3380 broke. That led to an initial move to Friday’s low of 1.3358 followed by a squeeze a few pips lower on selling around the European equity close. Small pop since then to 1.3362.
USD/JPY tracked the risk trade and chopped higher along with stocks. Most of Friday’s post-retail sales declines have been wiped out in the slow march to 102.57.
USD/CAD closes down 10 pips on the day and the rest of the commodity block is pretty much flat. The Aussie dollar perked up to 1.9334, matching Friday’s high but the sellers were waiting and it has grinded down to 0.9324.
Crude is at the lowest levels since January at $93.80 as the market scoffs at geopolitical risks.
