Forex news for May 5, 2015:

  • US March trade deficit 51.4B vs 41.7B expected
  • April ISM non-manufacturing index 57.8 vs 56.2 expected
  • ISM's Nieves says weather is no longer an influence
  • April final Markit US services PMI 57.4 vs 57.8 expected
  • May 2015 US IBD TIPP economic optimism index 49.7 vs 50.0 exp
  • New Zealand GlobalDairyTrade index -3.5%
  • European Commission and IMF reportedly at odds on Greece
  • Deal with Greece at May 11 Eurogroup meeting unlikely - MNI source
  • OPEC likely to maintain output at June 5 meeting - RTRS sources
  • US first quarter GDP likely to be negative after jump in trade deficit
  • ECB's Jazbec says stimulus measures seem to be working
  • Gold up $5 to $1193
  • WTI crude up $1.47 to $60.40
  • US 10-year yields up 2 bps to 2.165%
  • German 10-year yields up 6 bps to 0.52%
  • S&P 500 down 25 points to 2089
  • AUD leads, USD lags

Backward-looking data outweighed a forward-looking survey for the US dollar on Tuesday. But bonds might have been the larger driver.

The dollar fell after the worst reading on trade in 6 years. That led to downward revisions to Q1 GDP by as much as 0.5 pp. The US dollar even fell against the loonie despite Canada's trade deficit hitting an all-time high. The original move was 25-40 pips lower in the dollar across the board but much of it had recovered ahead of the ISM data. Even though those numbers look at Q2 and they were strong, the dollar continued to slide.

Many pointed the finter at the bond market as the crowded bund trade continues to unwind. That's led to US dollar hedges being removed and selling of the currency.

EUR/USD chopped in a 1.1115 to 1.1170 range on the data points the resumed its climb higher, touching as high as 1.1220 to match Monday's high. But sellers were waiting there and the pair is back to 1.1185.

USD/JPY finishes the day down about 30 pips. It had been up by that margin in European trading but it fell on the trade data to 120.10 and then the post-ISM rebound to 120.40 faded as stock markets melted. We finish near the lows of the day at 119.85 to end four days of gains.

Cable was a bright spot as election polls fail to jar the currency. The pound found steady buyers after the trade numbers in a move to 1.5170 and then 1.5215 before settling back to 1.5176. Today's price action underscored bids at 1.5085.

The Australian dollar was the big winner on the day as it reversed the RBA kneejerk and rallied to 0.7919 in Asia before falling back to 0.7870. But the trade numbers and USD selling sparked fresh highs to 0.7950.

NZDUSD was a bit of a puzzle. Prices fell in the dairy auction but the market must have been looking for something worse as the kiwi surged to 0.7570 from 0.7510 after the auction results. That came amidst a broad decline in the US dollar so it probably overstates the NZD strength.

USDCAD went back to test 1.2000 but the loonie was unable to take advantage of the weak dollar and strong oil prices with an election in Alberta today. The pair crawled back to 1.2075.