Forex news for US trading on August 24, 2015:

  • North and South Korea agree to end tensions
  • Fed's Lockhart: Yuan, US dollar and oil prices complicate US outlook
  • July 2015 US Chicago Fed national activity index 0.34 vs 0.20 exp
  • ECB QE count: PSP €279.8bn vs €269.9bn prior
  • Barclays knocks back Fed hike expectations
  • Goldman Sachs says recent moves reflect China and oil
  • Gundlach warns that US equity markets face another leg down
  • Finland's Stubb say the economic outlook is worrying
  • UK's Osborne says China isn't a specific G20 agenda item
  • Gold down $7 to $1154
  • WTI crude down $2.32 to $13.13
  • US 10-year yields down 1.9 bps to 2.01%
  • S&P 500 down 77 points, or 3.9%, to 1893
  • European stocks fall about 5%
  • JPY leads, NZD lags

The news today was the market. Worries about China, oil, global growth and the Fed manifested themselves into a panic and some of the biggest market moves in years.

USD/JPY at one point fell more than 4.5%, which was the largest one-day decline since 1998. The peak of the panic came shortly before US stock markets open. The US dollar and other currencies completely lost a bid for a few minutes and in that time USD/JPY fell to 116.18 from 119.50. It's tough to even quantify the low print because liquidity was said to be almost non-existent.

At the same time, the pain was magnified in commodity currencies as NZD/JPY fell as much as 12.5% in lightning quick moves. Afterwards, the commodity currencies bounced all the way back and were somewhat surprisingly subdued in later trading. Part of it was that the US dollar was in the crosshairs more broadly.

Stock markets made an epic comeback midway through the day and the S&P 500 was down less than 1%. That helped USD/JPY rebound to 119.46 but the sellers slowly came back in an afternoon slide to 118.36 but even with stocks retesting the lows, the pair stayed way above the bottom.

The euro has proven to be a major winner as carry trades and the crowded levered-long position in the US dollar unwinds. The high was 1.1714 as barriers were crushed. After the initial squeeze, it chopped mostly in the 1.1520 to 1.1620 range and we finish up squarely in the middle.

Cable has also proven to be a winner, hitting 1.5803 in an initial push and then fading back to 1.5723 before a second rally to 1.5775.

What stood out late in the day was how composed the FX market was even as stock were hitting the panic button again. That suggests a bit more calm that stocks are signaling. All eyes now shift to China.