Forex headlines for April 10, 2014:

  • US initial jobless claims 300k vs 320k exp
  • Canadian Feb new housing price index 0.2% m/m vs +0.1% exp
  • Putin tells several European leaders that Ukraine’s gas debt has reached a ” critical situation”
  • ECB’s Praet: Latest data confirm eurozone is recovering slowly
  • Praet: Signal of readiness to launch QE is what is important now
  • Fed’s Evans: Strong Us economy important for global growth
  • EU trade commissioner says euro is too high and that it would be better at $1.20
  • Dollar stores cutting prices
  • 100.81 is the pivotal level in USD/JPY – BAML
  • Bitcoin down 10%
  • US March govt deficit $36.9B vs $36.0 expected
  • Gold up $6.50 to $1318
  • WTI crude down 18-cents to $103.42
  • S&P 500 down 39 points, or 2.1%, to 1833
  • Nasdaq down 3.1%
  • US 10-year yields down 4.5 bps to 2.64%
  • JPY leads, CAD lags

The stock market took a beating but it was hardly a ripple in FX and the bond market was somewhere in between. There isn’t an easy explanation for the stock market sell-off. US data was good. The best explanation is the soft Chinese trade data and a comment from the Chinese Premier ruling out stimulus. The market opened a touch higher then began to bleed, then went into cardiac arrest. The break of the March lows makes for an ugly chart.

Outside of stocks the picture isn’t so bad. 10-year yields bounced from the March lows and USD/JPY didn’t even have a look at the key 101.20 to 101.80 support zone. The pair perked up to 101.95 after jobless claims but then slid back down to the European low of 101.42. A few traders hit the panic button when it broke but the low of the day was only 101.33 and even as stocks and bonds shuddered, the pair wouldn’t move an inch lower. The Nikkei is testing some key levels and we’ll see if USD/JPY can weather the losses. Last at 101.48.

EUR/USD took advantage of broad dollar weakness. The tell was when the pair hardly sold off after the best jobless claims report since 2007. Still, 1.3899 capped the upside from about 1.3865 when US traders came in.

Cable traded in a 20 pip range on either side of 1.6770, which is eyebrow raising given the volatility elsewhere. It dipped on the jobless claims data but it was strictly dollar selling on the ‘risk off’ trade, which is unusual. If the yen crosses crack, look for GBP/JPY to lead the pound lower.

The Australian dollar did a good job of weathering the China trade data overnight but the commodity bloc was under some modest pressure on the broad fear in stocks. Still, the European lows at 0.9400 easily held.

The loonie was the laggard as USD/CAD climbed to 1.0928 from 1.0880 at the start of the day. It was the only trade that held a trend throughout the day.