Forex news for October 16, 2014:

Markets had another bout of panic but it peaked very early in the US morning and slowly ebbed afterwards. Sentiment slightly improved on the excellent data on jobless claims and IP but it was Bullard who marked the most dramatic turnaround.

He was scheduled to speak later but appeared on Bloomberg TV and dropped a bomb. He said “a reasonable response” from the Fed would be to delay the taper. He didn’t necessarily say the Fed should do it but it wasn’t something that was even on the table and that the comment came from a Fed hawk was a shock.

The market reaction was immediate and dramatic. Stocks surged to erase losses and bonds tumbled. The US dollar moves were less impressive but the idea the Fed could keep printing opens the door to all kinds of dovish policies and could limit USD strength.

A softer US dollar continued to weigh, with the exception of USD/JPY which was boosted by risk appetite. EUR/USD tracked up to 1.2835, about a cent higher than at the start of US trading.

Cable was near a session high (at the time) when the Bullard news crossed. It climbed in a steady move to 1.6090 from about 1.6000 thereafter. Yesterday’s high of 1.6072 stalled the advance for a period but now offers ahead of 1.6100 are the spot to watch.

The Canadian dollar was an outperformer as USD/CAD fell about 100 pips down to 1.1250 but bids just below that also held yesterday’s low are supporting the pair. AUD and NZD were also buoyant but haven’t mounted a serious challenge of yesterday’s highs.

Oil fell through $80 briefly but surged back and spiked to nearly $85 very briefly before tailing back to $82.73. Gold continues to remain quiet and, curiously, couldn’t find a bid even on the idea of more QE.


ebola is the main background story and is starting to affect markets