Forex news for North American trading on August 12, 2020:
- US July CPI +0.6% m/m vs +0.3% expected
- OPEC lowers global oil demand forecast
- Fed's Daly: Recovery will be slow, gradual and shaped by virus
- US July monthly budget deficit $63.0 vs $137.5B prior
- US CDC reports 1244 new virus deaths and 163,651 total
- Fed's Rosengren says it's too early to worry about significant inflation
- Fed's Kaplan: US economy to grow up to 20% in 3Q
- DOE crude oil inventories -4512K vs -2200K estimate
- Fed's Rosengren: Recent slowdown in US economic activity is likely to continue
- White House studies options for stimulus as Meadows leaves Washington
Markets:
- Gold up $1 to $1913 after trading in $110 range
- US 10-year yields up 2.5 bps to 0.666%
- S&P 500 up 46 points to 3380
- WTI crude oil up 96-cents to $42.57
- CHF leafs, JPY lags
You can't really point to any factors behind the jump in risk appetite after the negative reversal on Tuesday. There was clearly some dip-buying and TSLA rallied 13% on a stock split, so that's a sign of money waiting in the wings.
The CPI report and Mnuchin backing off a capital gains tax cut caused some ripples in markets but that was overshadowed by the overall positive sentiment. That helped to sustain a bid in EUR/USD that started in Asia. It steadily climbed to 1.1800 then ran some stops above before settling near 1.1787.
Cable chopped back and forth in a 1.3010-1.3060 range without really going anywhere. It finished near the low end as the dollar strengthened late.
USD/JPY rose for the fourth day to wipe out t he late-July slump but stalled at 107.00 and backed off to 106.70 before a second challenge of 107.00 also failed, creating a mini double top.
The commodity currencies were strong, led by the loonie. With oil prices higher on the tighter US inventory data it was an obvious candidate but USD/CAD couldn't fall below the recent bottom and make a new 5-month low. That will be a spot to watch in the day ahead.
