Forex headlines for August 28:
- Carney: To consider more stimulus if financial conditions tighten or recovery risks falling short
- Carney: Signs are the UK recovery is broad based, set to continue
- Carney: BOE to reduce required liquid asset holdings for major banks meeting 7% capital thresholds
- US pending home sales -1.3% vs -0.5% expected
- S&P says rising US student debt could be a long-term drag on consumer finances
- Italy cancels property tax on first homes, Deputy PM says
- Fed officials on the sidelines at Jackson Hole said a Sept taper likely – CNBC’s Liesman
- S&P 500 up 0.3% to 1634
- Gold up $1 to $1416 after hitting $1433
- USD leads, JPY lags
The pound was the highlight of the session as Carney delivered his first speech at the BOE helm. The initial reaction was a drop in cable to a session low of 1.5429 but that quickly reversed to 1.5550 on optimism about the cut in liquidity requirements and his optimism on the economy. A short squeeze may have also been a factor. Offers at 1.5555 kept the rally in check and it was a sideways chop in the 1.5500 to 1.5550 range from there.
The euro was caught in the cable drama as it initially rebounded 25 pips to 1.3370 but then sank to a session low of 1.3305 at the US stock market open. Negativity in stocks weighed early but better sentiment led to a slow, steady rebound to 1.3340.
USD/JPY also benefited from better sentiment — worries about Syria have ebbed. The pair broke important support at 0.9690 overnight but only for a moment and there has been a steady climb to 97.75 since. Sovereign supply ahead of 97.80 has capped the move and more strong offers are at 98.00.
The Australian and New Zealand dollars experienced somewhat of a relief rally on better sentiment in stocks. AUD/USD touched a three-week low at 0.8893 then promptly rebounded to 0.8940 on better risk sentiment.
