Forex news for North American trading on December 12, 2019:
- US reaches deal in principle with China, awaits Trump sign off
- US negotiators offer to cut Chinese tariffs by up to 50% on $360B in imports - WSJ sources
- Trump: Getting VERY close to a BIG DEAL with China. They want it, and so do we!
- US Senator says Lighthizer told him announcements possibly 'imminent' on China tariffs
- US initial jobless claims 252K vs 214K estimate
- US PPI final demand for November 0.0% versus 0.2% estimate
- China looks to set GDP target of "around 6%" for 2020 - report
- Poloz: We don't put a lot of weight on individual data points, especially jobs
- Canada opposition leader Andrew Scheer quits as Conservative leader
ECB:
- Lagarde Q&A: 2022 inflation direction is good but not at target
- ECB bumps up 2020 inflation forecast on higher expected oil prices
- ECB makes minor tweaks to GDP projections
- Lagarde opening statement: Some initial signs of stabilization in growth slowdown
Markets:
- Gold down $5 to $1469
- WTI crude up 58-cents to $59.34
- US 10-year yields up 11 bps to 1.90%
- S&P 500 up 27 points to 3169
- AUD leads, JPY lags
Today is the kind of day that reminds me of the crisis. The news and volatility was non-stop with all kinds of rumors mixed in. Except in the crisis the order of magnitude was far larger.
Lagarde was up first and the euro hit a high at 1.1154 when she expressed a bit of optimism on growth and noted some downsides to negative rates. Later, the euro skidded back to 1.1103 on USD strength and risk appetite, highlighting its status as a funder.
USD/JPY was the more straightforward trade today. It rallied on the initial Trump tweet about China and the US wanting to make a trade deal and steadily climbed higher as more reports and details about a trade deal trickled in. On net, it climbed to 109.31 from 108.62 in a solid rally that was underpinned by higher yields despite a super-strong bond auction.
Cable hit a seven-month high in Asia but it was all downhill early in New York trade in a choppy move down to 1.3051 on rumors about a weak Conservative showing. However in the past two hours there has been a big rebound to 1.3165, leaving the pound down only 35 pips on the day. The exit poll is due at 5 pm ET (2200 GMT) and that's going to spark a huge move.
On a technical basis AUD continues to be the spot to watch. It extended above the year-long trendline that it broke yesterday and briefly rose above the 200-day moving average -- a level that's been huge resistance for 18 months. It sits just under it now.
CAD traders were anticipating Poloz but he didn't offer much and the loonie was stuck around 1.3180 all day despite a nice rally in oil. The loonie has been forgotten in the latest risk rally but there are good signs brewing.
