Forex news for North American trade on November 8, 2018:
- Federal Reserve keeps rates on hold at 2.00-2.25%, as expected
- The November 2018 full statement from the Fed
- Canada at odds with US on text of USMCA deal - report
- SNB's Maechler on Swiss monetary policy
- ECB's Nowotny: No risk of a recession. Growth is normalizing
- Draghi: ECB can change forward guidance if outlook worsens
- ECB's Draghi: Eurozone economy is performing well
- Brexit: Full withdrawal agreement could be published Tuesday
- Canada September new housing price index 0.0% vs 0.0% m/m expected
- US weekly initial jobless claims 214K vs 213K expected
- Canada October housing starts 205.9K vs 200K expected
- IMF sees Italy's GDP growth at 1.0% in 2019
Markets:
- USD leads, EUR lags
- S&P 500 down 13 points to 2800
- WTI crude declines for 9th day, down $1.09 to $60.59
- Gold down $4.60 to $12.24
There market was in a holding pattern in anticipation of the FOMC decision. When it finally came, there weren't any fireworks in the text but it signaled an all-clear in the markets and a trend to buy the US dollar quickly developed.
Part of that was the lack of any substantive changes in the FOMC statement. If you were in the camp that the Fed would only hike once next year, then you'd think they might want to hint of a slowing pace of hikes soon. It certainly didn't come today with continued references to strong growth and employment in the statement.
The initial USD move was modest but it gained momentum and climbed 20-50 pips across the board.
In USD/CAD, the move extended to 80 pips after a report that diplomats were having a tough time agreeing to the final text of the USMCA agreement. The loonie also wasn't getting any help from oil, which is now down 20% from the highs a month ago.
Cable bounced between gains and losses before sagging to 1.3060 late on broad US dollar strength.
For the euro, there was plenty of ECB talk and by-and-large policymakers retained their (misguided?) optimism. However Draghi said that if data disappoints then forward guidance could be downgraded. That contributed to the slide to 1.1360.
USD/JPY rose to a one-month high, tripping some stops on the way up. Even with stocks under pressure late, it remains near the best levels of the day, near 1.1400.
