Forex news for US trading on August 25, 2015:

  • August 2015 US consumer confidence 101.5 vs 93.4 exp
  • Richmond Fed manufacturing index 0 vs 10 exp
  • US July new home sales 507K vs 510K expected
  • June 2015 US FHFA HPI 0.2% vs 0.4% exp m/m
  • June Case-Shiller US 20-city house price index +4.97 y/y vs +5.1% y/y expected
  • August 2015 Belgium business confidence -5.1 vs -3.5 exp
  • August 2015 US Markit services PMI flash 55.2 vs 56.0 exp
  • Discount minutes continue to show five votes for hike
  • BOC Deputy Governor Schembri: No comments on the outlook or monetary policy
  • August 2015 US Philly Fed non-manufacturing business activity index 15.4 vs 8.1 prior
  • Gold down $16 to $1139
  • WTI crude up $1.10 to $39.34
  • US 10-year yields up 13 bps to 2.13%
  • German 10-year yields up 14 bps to 0.73%
  • S&P 500 down 25 points to 1867
  • 80 point intraday reversal lower in stocks is largest since 2008
  • AUD and USD lead, EUR lags

The original title of today's wrap had something in it about a bounce in US stocks after the PBOC rate cut but a crushing wave of selling tore apart the narrative and left stock markets deeply in the red.

The tough part to reconcile is that FX and bonds didn't have quite the same level of concern. USD/JPY had been chopping around 120.00/119.80 for most of the session and then slumped to 118.93.

EUR/USD was steadily falling and touched 1.1397 around the European close. But from there it slowly crawled back and then climbed to 1.1515.

In the bond market, a 12 bps rise in 10-year T-notes was pared to a 6 bps rise.

In all, the rest of the market isn't quite on board with stocks but you have to contemplate whether it's just lagging behind. I think it's tough to argue that stocks aren't in the drivers' seat at the moment so I think watching stocks is the best way forward.

Another narrative was a sharp drop in the Canadian dollar despite gains in oil. The pair pulled a 200 pip intraday turnaround from 1.3150 to 1.3350 and it was going strong even before the wheels fell of the stock market. Sifting through the wreckage of the day, that stands out as a theme that could last although it's likely to take a break in the day ahead after the huge draw in API inventories.