Forex headlines for April 16, 2014:

  • Yellen: Fed committed to accommodation to support recovery
  • Yellen: Too-slow inflation a greater risk than too fast
  • Beige Book: Growth ‘increased in most regions’ of US
  • BOC says view hinges critically on the projected upturn in exports and investment
  • BOC raises inflation forecasts
  • Poloz: Lower Canadian dollar should provide more support
  • Poloz says Bank of Canada hasn’t shut the door to rate cuts
  • March US industrial production 0.7% vs 0.5% exp m/m
  • March US housing starts 0.946m vs 0.973m exp m/m
  • Fed’s Lockhart: Liftoff seems likely in latter half of 2015
  • Fed’s Stein says QE has been beneficial
  • White House ‘actively preparing new sanctions’ on Russia
  • Pro-Russian separatists attack Ukraine soldiers – report
  • Gold flat at $1303
  • WTI crude flat at $103.87 after hitting $104.99
  • S&P 500 up 19 points to 1862
  • GBP leads, JPY lags

There was plenty on the calendar but it wasn’t really the headlines that drove trading. Instead, risk trades wanted to rebound from the pain earlier in the week.

Trading in USD/JPY was extremely tight in a 15 pip range around 102.25. Even the 1% swing in the S&P 500 hardly budged the pair. It was the same thing when risk trades were hurting earlier in the week and underscores the disconnect.

EUR/USD hit stops below 1.3830 after touching 1.3850 in Europe. The upbeat tone in US stocks weighed but there wasn’t a real driver. Last at 1.3815.

Cable sprinted higher in Europe on upbeat jobs data and then flatlined around 1.6800. The high on the day fell just short of last week’s 1.6820 top.

The Canadian dollar was in focus on the BOC. USD/CAD jumped to 1.1030 from 1.0975. Inflation forecasts were hiked and I struggle to see what headlines drove the buying. The turnaround in oil likely helped. The pair later faded back to 1.1010.

Risk trades were cautious ahead of Yellen and, although she spoke at length, there wasn’t much to takeaway. The market was worried about a hawkish comment and when nothing came, it was a green light to buy risk trades.