Forex headlines for Oct 1, 2014:
- US ADP employment report 213k vs 210k exp
- US ISM manufacturing PMI 56.6 vs 58.5 exp
- ISM comments reflect generally positive outlook
- September 2014 US Markit manufacturing PMI final 57.5 vs 58.0 exp
- SNB’s Jordan touts the EUR/CHF floor once again
- Draghi says monetary policy alone cannot restore confidence and return eurozone to growth
- Blackrock’s European bonds chief says buying periphery bonds on expectations of ECB sovereign QE making a “mistake”
- Canadian RBC PMI 53.5 vs 54.8 prior
- Fonterra’s GlobalDairyTrade price index falls 7.3%
- David Tepper: If the ECB starts to do QE it will be the beginning of the end of the bond bull market
- McCrann: Retail sales could be used to justify lower rates in Australia
- Goldman Sachs cuts Q3 US GDP estimate
- S&P 500 down 26 points to 1946
- Gold up $6.40 to $1214
- WTI crude down 23-cnts to $90.94
- 10-year US yield falls 9.6 bps to 2.39%
I blame the first day of the quarter but here is the wall of worry if you’re the kind of person wants a reason for everything, here are some of the factors people cited for the massive flight to quality today.
- Hong Kong protests
- Talk about fresh Russian sanctions
- The soft German PMI
- ISM manufacturing
- Caution ahead of ECB and non-farm payrolls
- Turn of the calendar/quarter
For all the big moves in stocks, the FX generally took it all in stride. The main feature was yen weakness but other than some more-intense selling against NZD (Fonterra) and GBP (Markit PMI) the damage was limited.
That said, there’s are lot of questions about USD/JPY after the turnaround today slapped a bearish outside reversal from the 6-year high earlier in the day.
No one seemed to pay much attention to the head of bonds at Blackstone saying it’s a “mistake” to think the ECB will buy sovereign bonds. There will be a massive focus on Draghi in the day ahead. His comments today might have been a preview.