Forex news for North American trade on August 1, 2019:
- Trump hits China with fresh 10% tariffs on remaining goods
- Trump's tariff announcement was a cabinet team effort - report
- US June construction spending -1.3% vs +0.3% expected
- US July ISM manufacturing index 51.2 vs 52.0 expected
- US July final Markit PMI 50.4 vs 50.0 prelim
- Markit July Canada manufacturing PMI 50.2 vs 49.2 prior
- US weekly initial jobless claims 215K vs 214K expected
Markets:
- Gold up $27 to $1441
- WTI crude down $4.13 to $54.45
- US 10-year yields down 12 basis points to 1.89%
- JPY leads, AUD lags
The market was digesting the Fed decision and started to fall into a bit of a lull when a series of tweets from Trump hit the market like a lighting bolt, smashing risk trades.
The yen was the main beneficiary as yen crosses sank to lows, some of them not seen since the flash crash. USD/JPY pulled an outside reversal from a two month high of 109.32 down to a two week low of 107.35. The June low of 106.78 is one to watch.
Yen crosses were even more dramatic as AUD/JPY broke the June low and is threatening the lowest close since 2010 in a 2% drop.
European currencies were quite sure what to do with the trade news. EUR/USD and cable both inched higher on the news but the gains have been limited. The paradigm is that global growth is damaged but US rates have more room to compress so there's a standstill.
Commodity currencies were the hardest hit. USD/CAD was knocked by the worst day in crude since 2015. Given that, it held up ok, climbing about 30 pips on the day to 1.3220. The bloodbath in AUD/USD continues in the tenth consecutive day of losses. You don't see that kind of one-way move in G10 currencies often, and needless to say that it's not a good signs.
Gold was a big winner and is poised to close at the best levels of the day, up $30 to just shy of the cycle high. It's even more impressive when you consider that gold was down to $1400 earlier.
