Forex headlines for July 16, 2013:
- US CPI 1.8% y/y vs 1.6% exp
- NAHB housing market index at highest since 2006
- US industrial production +0.3%, as expected
- Fed’s George: Inflation appears to be ‘moderate’, still time to taper
- Hilsenrath: Fed plans to wind down QE asset purchases depend on solving various economic puzzles
- Canadian May manufacturing sales +0.7% vs +0.8% exp
- UK June house prices rise 0.8% y/y – Land Registry
- AHS’s McCrann says RBA will need persuasion to cut
- Bank of Portugal cuts growth forecasts
- Letta says one of main goals is to reduce Italian labor costs
- S&P 500 down 0.4%, breaks 8-day winning streak
- Gold gains $8 to $1292
- AUD leads, USD lags
The only thing more anticipated that Bernanke’s Wed-Thurs testimony is the Royal baby. Traders have been heavily invested in dollar longs this year and the shenanigans after last week’s speech from Bernanke have left them with a case of indigestion. Uncertainty breeds contempt and today was a race to get out of dollar longs. Commodity currencies rallied despite declines in stocks, which tells me it was all about positioning rather than bets on what Bernanke would say.
It was a slow bleed across the board. EUR/USD is near the highs of the day at 1.3164 compared to 1.3100 at the start of US trading. Offers at 1.3050 held back the dam for awhile but the appetite to short EUR ahead of Bernanke was minimal.
USD/JPY bounced in the 99.25/50 zone for most of the day but broke lower at the European close to 99.10. Very late in the day, it broke 99.00 and set off a series of stop losses to 98.90.
The most instructive pair of all might have been cable. The market tried to sell the pair on soft UK inflation data but that trade quickly lost momentum. Instead, it slowly grinded higher and is trading near the high of the day at 1.5152.
