Forex news for October 12, 2020
- US stocks end the session higher but come off the best levels of the day
- There's a whale in the water
- WTI crude oil settles at $39.43
- FX is not on the same page as the stock market today
- US adds 46K new coronavirus cases and 494 new deaths
- BOE Bailey: We think risks are all on the downside
- ECB sources: Policymakers reluctant to follow Fed with average inflation target
- Maj. European indices in the session mixed to start the week
- ECB De Guindos: ECB is be closely monitoring 2nd wave risks
- UK virus cases rise by 13,972 from 12,872 the day before
- GBPUSD moves higher as PM Johnson announces new coronavirus plan. BOE Haskel talks on negative rates
- Oil slumps below $40 with Libyan supply set to pick up
- Boris Johnson's spokesman: UK is at critical point to confront second wave
- The JPY is the strongest and the AUD is the weakest as NA trader enter for the dya
The week got off a a relatively quiet start in the forex market. The JPY was the strongest and the AUD was the weakest.
Although overall activity was somewhat muted, those rankings are out of whack with what typically happens when stocks move sharply higher (like they did today).
Looking at the US stocks, the major indices rose for the 4th consecutive day led by the NASDAQ composite index. The final numbers are showing:
- NASDAQ index up 2.56%
- S&P index up 1.64%
- Dow rose by 0.88%
Those are pretty hefty gains especially for the NASDAQ and S&P index.
The Pavlovian reaction MOST times is to see the flow of funds into "risk on" currencies like the AUD and NZD, and out of the so-called "relative safety" of the JPY pairs.
Today all the JPY pairs moved higher with the AUDJPY up 0.61%, the NZDJPY up 0.44% and the EURJPY up 0.29%. The USDJPY also rose by 0.22% on the day. Meanwhile, all the AUD pairs fell and most of the NZD pairs fell as well (the NZD only rose vs the AUD).
Perhaps without bond traders (the bond market was closed in observance of Columbus day), the market was missing a rudder. Perhaps, the forex market was telling us, stocks are out of whack. Adam pointed out that both Apple and Amazon were leading the charge, and the last time that happened the big whale Softbank was the pushing those stocks higher (see post here). Was Softbank artificially pushing the stocks to places they really did not want to go? Of course you may also argue the forex got it wrong.
Whatever the case may be, it was a different kind of day in the forex market today.
In other markets:
- Spot gold is down -$7.65 or -0.4% at $1922.75.
- Spot silver is trading down $0.04 or -0.16% at $25.11
- WTI crude oil futures are trading down $1.11 or -2.73% at $39.49
The US debt market was closed in observance of Columbus Day.
