Forexlive Americas FX news wrap: A Category 4 storm slams US stocks
Forex news for NY trading on October 10th 2018.
- Stocks plunge. Nasdaq falls 4% and worst day since Brexit. Dow down over 800 points.
- Senior White House official says stock selloff a bull market correction, will pass
- US trade representative Lighthizer: Preparing to negotiate four trade agreements
- Nasdaq falls to 200 day MA (dips below). First crack below since July 2016
- Hurricane Michael makes landfall near Mexico Beach Florida with 155 MPH winds
- Fed's Evans speaks to reporters: Fed could shift to slightly restrictive, then pause
- More Evans: Extremely comfortable with Feds path for rates
- US sells 10 year notes at a high yield of 3.225%
- Fed's Evan: Unusual for Pres. to comment but asking why rates need to rise is a fair question
- EIA cuts 2018 world oil demand by 60K BPD
- European shares in the day with sharp declines
- Atlanta Fed GDPNow estimate for 3Q GDP raised to 4.2% from 4.1% last
- Goldman Sachs raises GDP tracker to 3.5% from 3.2%
- US sells 3 year notes at 2.989%
- EU's Barnier: 80-85% of Brexit treaty agreed
- UBS 3Q GP tracker rises to 3.2% from 2.9% previously
- US Wholesale inventories (F) for August 1.0% vs 0.8% exp.
- US 10 year yields hit the highest level since May 2011
- Canada building permits for August 0.4% vs 0.5% expectations
- US PPI MoM for Sept 0.2% vs. 0.2% expected. YoY 2.6% vs. 2.7% expected
- The GBP is the strongest and the JPY is the weakest currency as NA traders enter.
Other markets wrap:
- Spot gold rose $4.29 or 0.36% at $1194.09
- WTI crude oil is down -$2.50 or -3.23%% at $72.55. The price is heading lower into the close as the private API data of weekly inventories is showing a surprise build of 9750K. The fall in crude came despite hurricane Michael which closed some production in the Gulf of Mexico.
- The S&P fell -94.66 points or -3.29% at 2785. The index fell below its 100 day MA at 2822.37. The 200 day MA is ahead at 2765.51. The price has not trading below the 200 day MA since May 3rd, 2017. It is 20 points away.
- The Nasdaq fell -315.96 points or -4.08% at 7422.05. The low reached 7420.56. The index fell below the 200 day MA for the first time since July 2016 at the 7499 level, and also below a trend line at 7475. It will take a move above those levels now to potentially turn the beat around
- The Dow fell -831 points or -3.15% at 25598. The low reached 25593. The index fell below its 50 day MA at 25995. The 100 day MA comes in at 25526.34. The Dow was last below the 100 day MA on July 9th, 2018.
Earning season is just getting started with JP Morgan, Citigroup, Wells Fargo and PNC Financial scheduled to report on Friday, with Bank of America and Schwab on tap for Monday. Other big names like IBM, Netflix, Goldman, Morgan Stanley, J&J, American Express, Paypal, Travelers, P&G, Intuitive Surgical and Honeywell are all scheduled to announce next week as well. Buckle your seat belts up. The market hurricane winds might stay around for a while.
The tumbling stock markets impact on other markets had a delayed reaction.
- Bond yields, were clinging to modest gains until late in the session when they turned negative on a flight to safety bid, and are ending down -3-5 bps. It took a while.
- Gold is up $4-$5 bucks but still remains below $1200 (at $1194). No real flight into the safety of the precious metal
Looking at ranges for the major pairs and crosses, the USDJPY, USDCHF, USDCAD, AUDUS and NZDUSD are ending at the days extremes (see chart below). The JPY crosses are also going out on their back (and at lows).
The question going forward is "What will tomorrow bring?" Will the sun come out or will the gusts of the storm today, continue to knock everything down in its path?
You can expect Asian shares to get hit. You can expect the European shares to sell off as well. That should lead to a lower US opening as well.
At the start of the day, the CPI will be released. The PPI data today did not show anything alarming with regard to prices, but who knows?
The expected reaction is sell off at the opening. Look bad and bounce back hard.
The problem is this hurricane might not follow the path that we all expect.