Forex news for August 12, 2015:

  • Stocks erase huge loss to finish positive
  • Fed's Dudley Q&A: What happens in China has huge implications
  • Dudley: Hopefully Fed able to raise rates 'in the near future'
  • German government does not think 3rd Greek bailout package is sufficient - EU sources
  • June JOLTS job openings 5249K vs 5350K expected
  • EIA US weekly oil inventories -1685K vs -1735K expected
  • Teranet July Canada house price index +1.2% vs +0.7% exp
  • Singapore's MAS says it stands ready to curb excessive SGD volatility
  • At least 50 people hospitalized after explosion in China
  • Gold up $14 to $1123
  • WTI crude up $0.28 to $43.45
  • S&P 500 up 2 points to 2086 after falling as low as 2052
  • CHF leads, USD lags

The US stock market made an epic midday turnaround as the market starts to have second thoughts about the idea that China's economy is imploding.

The theme in FX heavy US dollar selling. It began as US traders arrived at their desks and accelerated until the London close. It looks flow-related to me with a dose of Fed worries and a few other things.

The US dollar recovered slightly long with stocks but hardly even 20% of what it gave up. USD/JPY tumbled to 123.79 from a multi-month high of 125.28 in Asia-Pacific trading. It bounced to 124.18.

EUR/USD climbed above 1.1200 but couldn't break above the July high of 1.1215 and has pared back to 1.1171 but it still finishes up 130 pips on the day.

The Swiss Franc was a monster performer, gaining 1.3% as it unwinds recent losses on risk aversion. USD/CHF ended 8 days of gains and EUR/CHF declined after 6 days in a row higher.

Gold caught a bid on the burgeoning FX war in the fourth day of gains. It rose to $1126 but has been pinned in a tight range near the highs as heavy sell orders weigh.

The commodity currencies caught a big bid early but they were unable to force their way higher even as the dollar was falling elsewhere. USD/CAD is finding great support at 1.2950 and the Aussie is struggling ahead of 0.7400. It could just be a matter of time if Chinese markets starts to feel a bit better today and the capital outflows and yuan-dumping stall.

Cable rose as high as 1.5660 but that has been a zone of relentless selling and it couldn't hold the gains, falling back to 1.5622. After the US dollar, the pound was the weakest performer.