Forex news for October 21, 2014:
- US September existing home sales 5.17m vs 5.10m expected
- ECB’s Coene: ABS and bond purchases will encourage lending
- European Commission will tell five eurozone countries that budget plans risk breaking rules – FT
- SNB’s Zurbruegg: Current interst rates are appropriate from a price stability point of view
- BOJ’s Kuroda says yen has been bought recently on risk aversion and global growth worries
- Chinese Premier Li full of confidence on economy
- EU Commission to fine banks EUR 90mln for Swiss LIBOR rigging
- Schaeuble says weaker euro helps German exporters
- US house prices look to have topped out says Fitch
- Portfolio flow growing more negative for the euro — Goldman Sachs
- Gold up $2 to $1248
- WTI crude up 10-cents to $82.81
- US 10-year yields up 3 bps to 2.22%
- Best day of the year for the S&P 500 — up 36 points
- CAD leads, CHF lags
US traders woke up to the big story that the ECB was considering buying corporate bonds in order to expand its balance sheet. Officials didn’t really deny it, saying it’s not “currently” under consideration. But the original reports signaled a December or Q1 timeline so that leaves plenty of time for consideration.
The damage to the euro came early as it sagged down to 1.2716 after a bounce to 1.2780 on the first denial. Bids at 1.2715 have held so far and aided a bounce to 1.2740. But with US stocks absolutely roaring, money is flowing back into the US and has boosted the buck again late in trading. Last at 1.2726.
USD/JPY traders looked like they’d barely glanced at their stock tickers for most of the session. There was virtually no buying appetite as the pair stuck close to US session lows at 106.60. Some momentum has finally built late to 106.88 but the European high of 106.92 continues to hold.
Cable has been unwinding yesterday’s enthusiasm throughout the day and slipped back to 1.6121 from 1.6180 early. Most of yesterday’s gains have now been erased after offers near 1.6180 have proved tough to break.
The commodity bloc has been mixed, once again underscoring the complete disconnect between the risk trade and commodity currencies. AUD/USD peaked at 0.8834 in early US trading and has fallen nearly 60 pips since, threatening to close at 0.8777 — about the same level as pre-China GDP. There’s plenty of worry about Aussie CPI later.
The Canadian dollar showed that it’s more of a proxy for US excitement than anything. CAD shorts might also be covering ahead of the BOC on Wednesday (and retail sales). After a test of 1.1300 in Asia, the pair fell as low as 1.1202 before a modest bounce to 1.1227 late. Oil tried ot bounce early but finished close to flat.
