Forex news for October 15, 2014:
- US Sept retail sales control group -0.2% vs +0.4% expected
- Headline sales -0.3% vs -0.1% exp
- Second US ebola victim flew on commercial flight with fever
- White House says travel ban to ebola-affected countries “not on the table”
- Yellen said to voice confidence in expansion amid foreign risks
- Beige Book: US economic growth modest to moderate, similar to last month
- October 2014 US Empire state manufacturing index 6.17 vs 20.50 exp
- Wal-Mart cuts its sales forecast
- US PPI Final Demand -0.1% vs. +0.1% estimate. YoY 1.6% vs. 1.8% estimate
- August 2014 US business inventories 0.2% vs 0.4% exp
- September 2014 Canadian existing home sales -1.4% vs +1.8% prior
- US fiscal deficit falls below 3% of GDP
- Goldman Sachs lowers US growth estimates
- BOE’s Weale: Current UK inflation rate has been significantly depressed by rise in sterling
- ECB’s Nouy says ECB is equipped to minimise risk of financial crisis
- Crazy ebola rumors does the rounds
- Nomura spooked by volatility, says it’s closing US dollar longs
- Fed rate hike implied probabilities drop
- Greek bonds massacred
- S&P 500 down 15 points to 1862 after falling as low as 1820
- Highest S&P e-mini volume in 3 years
- US 10-year yields down 5 bps to 2.14% after falling as low as 1.86%
- Gold up $7 to $1239
- WTI crude down 30-cents to $81.55 from as low as $80.01
- NZD leads, USD lags
Where do we start? Sentiment was hanging by a thread and the retail sales report cut the thread and sent markets into the craziest day since the height of the European crisis; if not since the credit crisis.
There was no making sense of the tick-to-tick moves. The dollar was hammered by rapidly diminishing expectations for Fed rate hikes and because of collapsing US Treasury yields.
EUR/USD took advantage by jumping 200 pips to 1.2888 from as low as 1.2650. From there it quickly fell back to 1.2769 and them chopped around there for what seemed like forever before it finally broke back to the upside. A second push higher is underway with the euro at 1.2838.
Cable was a different story as it shot to 1.6070 and then all the way back to a fresh session low at 1.5875 and then late in the day back to 1.6016. It was that kind of day.
USD/JPY dropped below the 50% retracement of the rally since August but has bounced to 105.93.
Interestingly, the commodity currencies were able to take advantage of dollar weakness despite the risk rout. That shows that rate differentials, not the old risk trade, are still in change. Frankly it’s amazing to see the kiwi as the leader on a day when the S&P 500 was down more than 50 points at the lows. The milk auction also helped.
I’m still unimpressed by gold. Even with the dollar in free-fall and a full-on flight to safety underway, gold still couldn’t break $1250.
Oil found some buyers at $80.00 in an early dip but it’s far too early to call it a bottom.
I did a video with FXStreet right in the middle of the madness. Check it out.
