Forex news for January 7, 2015:
- December 2014 US ADP employment report 241k vs 225k exp
- FOMC Minutes: Net effect of oil price decline likely positive
- Minutes: Most participants saw no clear evidence of a broad-based acceleration in wages
- Fed wary of overseas growth risks – Hilsenrath
- November 2014 US international trade balance -39.0bn vs -42.0bn exp m/m
- Barclays US Q4 GDP estimate jumps after trade data
- Canadian Nov trade balance -$0.64B vs -$0.2B expected
- Canada Ivey PMI 55.4 vs 53.0 expected
- Germany open to Greek debt talks but not write-off
- India won’t impose further curbs on gold imports – trade sec.
- US EIA crude oil inventories -3062K vs -1754K prior
- Obama administration studying strategic oil reserve
- US MBA mortgage market index 329.9 vs 363.1 prior
- Goldman Sachs now sees ECB sovereign QE on Jan 22
- Buy USD/JPY – BAML
- S&P 500 up 23 points to 2025
- Gold down $3 to $1215
- WTI crude up 64-cents to $48.57
- US 10-year yields up 2 bps to 1.96%
- NZD leads, JPY lags
US trading on Wednesday didn’t have quite the level of excitement as early in the week but even a ‘quiet’ market these days is pretty good.
The theme heading into US trading was US dollar strength and the momentum peaked following the solid ADP numbers but it began to ebb shortly afterwards. The reaction to the minutes was initially choppy but then resolved towards a weaker dollar.
EUR/USD bottomed at the London fix at 1.1802. Three runs below 1.1810 all failed to take out the big figure and that was a queue for some profit taking in shorts and the pair climbed to 1.1858 but late in trading the sellers are back. Last at 1.1834.
USD/JPY stuck closely to 119.50 through most of US trading despite a quick foray to 119.65. The air came out of the balloon on the minutes and down to 118.83, hitting stops below 119.00 but the buyers are back once again. Last at 119.14.
Cable. At this point, what can you say? It’s been a nightmare start to the year and only a 50-pip loss on the day almost seems like a victory for the bulls. There was some sign of life as bidders stepped in on a test of 1.5050 to hold 1.5055 and that sparked a good bounce to 1.5107. The bargain hunters are prowling.
USD/CAD was in a 1.1820 to 1.1860 and made a few trips to either side. It managed a marginal high at 1.1890 but taking out the big figure was a stroke too far and it pared back to 1.1825.
It’s interesting to see the kiwi as the top performer for the second day, in two completely different risk environments. It suggests that a plain reach-for-yield is underway.
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