Forex news from January 6, 2014:
- December 2014 US ISM non manufacturing PMI 56.2 vs 58.0 exp
- US Nov factory orders -0.7% vs -0.5% expected
- Capital goods orders non-defense ex-air revised to -0.5% from 0.0%
- ECB looking at 3 different paths to sovereign QE – report
- Obama to nominate former Bank of Hawaii CEO as new Fed Board member
- Fonterra GlobalDairyTrade index rises 3.6%
- Canadian Nov industrial prices -0.4% vs -0.7% exp
- December 2014 US Markit services PMI final 53.3 vs 53.7 exp
- Five risks markets are underrating – BNP
- Talk of the SNB on the bid at 1.2008
- Obama won’t sign off Keystone pipeline bill if it passes through new congress says White House
- US 10-year yields fall as low as 1.88%
- Former Fed vice-chair Kohn guesses FOMC to hike in June
- S&P 500 down 18 points to 2002
- WTI crude oil down $2.16 to $47.88
- Gold up $14 to $1219
- NZD leads, GBP lags
There was no let-up in the volatility today. It was much of the same story as on Monday in a classic flight to safety. The yen was strong although the New Zealand dollar managed to out-pip it on a reach for yield and a better dairy auction.
USD/JPY skidded to 118.06 before it finally found some support ahead of the big figure. The real victim was GBP/JPY, which continued a swan dive of 700 pips in three trading days.
The euro continues to show that it’s not the worst harbor in a storm. It was a similar story in the risk routs in October and December. It made steady progress up to 1.1950 after the soft ISM and was steady until a round of USD buying on better sentiment whacked it back down to 1.1890 late.
Sterling is just an absolute basket case to start the year. The 1.55 level gave way a few days ago and it’s been a nightmare for the bulls. Cable finishes near the lows once again at 1.5157.
The Canadian dollar was surprisingly resilient in the early going and USD/CAD slipped to 1.1755 but it just didn’t make sense to sell USD/CAD in a ‘risk off’ environment and with oil in freefall. Eventually, it began to climb and hasn’t quit. Last at 1.1830.
AUD/USD was stable around 0.8120 for most of US trading. On the one hand, the yield is attractive but on the other, risk trades are in danger. Eventually, a wave of USD buying forged new sessions lows down to 0.8090.
