Forex news for December 11, 2015:

  • US retail sales Nov advance mm +0.2% vs +0.3% exp
  • October 2015 US business inventories 0.0% vs +0.1% exp m/m
  • December 2015 US Michigan consumer sentiment flash 91.8 vs 92.0 exp
  • US PPI final demand for November 0.3% vs +0.0% est
  • Fitch affirms UK and France ratings
  • Commitment of traders report: EUR shorts trimmed
  • UK affirmed AAA: This is why ratings agencies get the big bucks
  • FX performance this week: Turning Japanese
  • Baker Hughes oil rig count 524 vs 545
  • Carl Ichan warns on junk bonds
  • China gets clever in bid to weaken the yuan
  • ECB's Praet says QE will support credit growth
  • Gold up $4 to $1075
  • WTI crude down $1.48 to $35.29
  • S&P 500 down 40 points to 2012 - lowest since Oct 15
  • US 10 year yields down 10 bps to 2.13%
  • JPY leads, AUD lags

Risk trades were hammered as a major flight to safety grabbed hold of the market. The US retail sales report was a major focus going into the day but it turned into a non-event.

Instead the market focused on a small junk bond mutual fund that froze client withdrawals and said it will try to liquidate holdings in an orderly manner. Junk bonds have been everyone's favourite target for trouble and with oil continuing to fall (there's lots of junk-rated energy companies), everyone rushed to the exits.

USD/JPY started in Europe near 122.00 and was steadily sold to 121.50 as US traders arrived. A flurry of worries hit just before the stock market open and heavy selling hit stops below 121.30 and continued all the way to 120.59 before a late bounce to 120.86. Stocks finished near the lows of the day so the late bounce is on thin ice.

The euro put a heavy squeeze on the market in the early going as it shot to 1.1025 from 1.0950 in a quick move. Then almost as quickly, it fell back to 1.0965. That rattled both sides of the trade as it looked like some panicky flows were going through. Cooler heads prevailed and the euro chopped sideways around 1.0990 from there. Still lots of chapters to be written in that saga.

Cable was a winner on the day. It took advantage of the heavy USD selling at the start of US trading and never gave it back. The quick 50 pip rally took it above 1.5200 and as high as 1.5240. In periodic selling, 1.5200 then acted as solid support. Impressive day for sterling.

Not so much so for CAD. The wheels have come of the loonie express and oil falling another 4% absolutely punished it. USD/CAD finished up another 131 pips in a virtually uninterrupted move. The tell that it was going to be a rough day for the pair was back in Asia-Pacific trading when it climbed so easily.

AUD/USD erased the jobs report gains yesterday and that was a sign that good news was being overlooked in favour of commodity weakness. AUD/USD was a steady slider and finished the day a cent lower at 0.7182.

Overall, this week was supposed to be the calm before the Fed storm. It was anything but.

Next week should be just as wild. Have a great weekend, if you're free at 2000 GMT on Saturday, check out this forex workshop.