Forex news for October 13, 2014:
- S&P 500 down 30 points, or 1.6%, to 1875
- Fed’s Evans: Too early to be worried by inflation break-evens
- Fed’s Meester: Only sustained dollar strength could dim US growth
- ECB’s Weidmann: Credibility of fiscal rules at stake if stretched more
- Italian stats office sees Q3 growth declining 0.1%
- Italy’s Padoan is confident that the eurozone is on its way back to sustained growth
- ECB’s Praet says the risk of falling into deflation is “Not zero”
- Russia and China sign local currency swap deal
- Gold up $11 to $1233
- WTI crude down 63-cents to $85.18
- JPY leads, AUD lags
The stock market rout continued for a third day. It looked like the bulls might stage a rally in the early going and the market was only slightly lower until the final hour of trading. That’s when the wheels came off. As the earlier lows gave way, a run on stops led to a painful close.
The FX market was mostly able to ignore the flight to safety. That is, until it got really bad. After the S&P 500 fell by more than 1%, the yen began to rally and USD/JPY fell to 107.08 from 107.40. The pair is scarcely holding the earlier low of 107.06 with bids at 107.00 supporting.
EUR/USD was able to make some gains as the stock market slump pushed US rates lower (in holiday-thinned trading) but the 1.2700 level is holding so far, as it did in Europe and Asia. Look for buy-stops above.
Interestingly, the commodity bloc didn’t react much to stocks. AUD/USD sagged about 10 pips down to 0.8760 and NZD/USD the same but both finished within striking distance of the session high.
Cable was under pressure for most of US trading. After starting near 1.6100 the European low of 1.6075 gave way and the slide continued to 1.6051 where some bids and broader US dollar selling prompted a bounce back to 1.6075.
