Forex headlines for June 26, 2014:

  • May US core PCE inflation 1.5% vs 1.5% exp y/y
  • US personal spending 0.2% vs 0.4% exp m/m. Prior -0.1%
  • Initial jobless claims 312K vs 310K expected
  • Bullard: markets don’t appreciate how close the Fed is to goals
  • Fed’s Lacker: labor market reflects structural trends rather than a cyclical change
  • ECB may not have reached lower bound on rates – ECB sources from MNI
  • ECB could use rate cuts instead of QE – MNI sources
  • ECB will wait 6-9 months to assess latest moves
  • Carney says rates at 2.5% in 3 years is consistent with gradual hikes
  • SNB’s Jordan says the franc cap is the right monetary instrument for the high franc
  • Italian PM Renzi says EU must focus more on growth and employment
  • Morgan Stanley still like their EUR/USD short at 1.3620
  • S&P 500 down 2 points to 1957
  • Gold down $3 to 1316
  • WTI crude down 92-cents to $105.58
  • NZD leads, EUR lags

The personal spending and ECB headlines were the top stories of the day. USD/JPY broke below the 200-dma to 101.49 on the data and a sour mood at the open of the stock market added to the pain. But you couldn’t keep stocks or the US dollar down. I suspect quarter-end flows were part of the equation, plus it’s tough to take a two-ticks miss on spending and draw conclusions. But the end fo US trading we were back to where we were at the start at 101.70.

It was a different story for euro traders. The PCE report caused a blip but the larger move was lower on the MNI ECB sources story. That knocked out 1.3600 support and cut down to 1.3641. The headlines were that the ECB was looking at rate cuts but the text showed rate cuts would come instead of QE and that it would be a long wait. That isn’t nearly as dovish as the first reaction and the euro eventually climbed all the way back to 1.3618. Last at 1.3607.

Cable was the high-flyer coming into the day as Carney’s highly touted measures to cool housing amounted to a pledge to do something if prices go up. That makes rate hikes more likely as a tool to cool the economy and cable started US trading with a test of 1.7042 but it wouldn’t break, slipped back to 1.7000 but has bounced to 1.7022.

The star of the show once again was the Canadian dollar. While most of trading floors were tuned to USA-Germany, USD/CAD broke below 1.0700 to the lowest since early January. The bottom was at 1.0683 and we’re close to there. I don’t see much in the way of support nearby.

The kiwi also remains a high flyer and showed no signs of a pullback despite briefly falling below the Asian lows. Last at 0.8773. AUD/USD touched 0.9400, last at 0.9414.