Forex headlines for Sept 22, 2014:
- Draghi says eurozone recovery is losing momentum
- ECB has seen ‘very modest’ signs of credit improvement
- Eurozone Sept consumer confidence -11.4 vs -10.5 expected
- US existing home sales come in at a 5.05M vs 2.0M expected
- Fed’s Dudley says economy needs to run a little hot given inflation
- Dudley: Below 2% inflation argues for patience on rates
- Philly Fed president Charles Plosser will be retiring in March 2015
- BOC’s Wilkins: Canada neutral interest rate in 3-4% range
- Wilkins: Canada may need loose policy even at full capacity.
- Chicago Fed National Activity Index August -0.21 vs +0.33 exp
- Merkel says French reforms are aimed at competitiveness
- Isreali central bank holds rates at 0.25%
- S&P 500 down 17 points to 1993
- Gold up $1.16 to $1217
- WTI crude down 89-cents to $91.52
- GBP leads, CAD lags
For the eurozone recovery to lose momentum, it had to have momentum in the first place. Perhaps that was why the euro only slipped about 20 pips on Draghi’s comments and then came all the way back. Really, it was nothing new because the latest measures were more than enough to signal that all is not well in euro-land.
The broader story was risk aversion. US stock futures were pointing about 7 points lower as US traders arrived but finished the day another 10 points lower. That took USD/JPY down to 108.77 from 109.07. The soft existing home sales numbers added some selling as well in that pair.
The larger moves were in cable and the commodity bloc. Cable is seeing some of the referendum fright come out of the market. The latest push is challenging the European high and it looks like we’ll close at the session high. Last at 1.6345.
Most of the commodity FX damage was done in Asia and Europe but the Canadian dollar really saved about 30 pips of gains for US traders. The high was 1.0927 and came after Wilkins comments. The ‘neutral’ rate isn’t a surprise (it will be a surprise if we ever get there) but her other comments about inflation being no surprise and loose policy at full capacity were dovish.
The big news on the day was right here at ForexLive as the inmates are now running the asylum. Stay tuned for more.
