Forex news for NY trading on August 15, 2019
- Trump pressured Mnuchin to name China a currency manipulator
- Fed's Bullard: We pay attention to markets and data
- US crude oil settles at $54.47
- There's a rumor about the Fed doing the rounds
- Even the best of the best are dead wrong sometimes
- Bank of Mexico delivers surprise 25 basis point rate cut
- The bid in bonds is absolutely relentless: 10-year yields fall to new lows
- Atlanta Fed GDPNow Q3 tracker raised to 2.2% from 1.9%
- European equity close: More losses everywhere
- Di Maio says Salvini now regrets trying to sink the government
- Gibraltar says no longer has grounds to hold captured Iranian tanker
- Shares of GE down 7% after report says finance unit hiding $38 billion fraud
- US August NAHB housing market index 66 vs 65 expected
- US June business inventories 0.0% vs +0.1% expected
- ECB's Rehn says it's better to overshoot on stimulus than undershoot
- Trump: China trade deal has to be 'on our terms'
- US July industrial production -0.2% vs +0.1% expected
- ADP Canada July employment +73.7K vs +30.4K prior
- US Q2 prelim non-farm productivity +2.3% vs +1.4% expected
- Philadelphia Fed business outlook for August 16.8 versus 9.5 estimate
- US initial jobless claims 220K vs 212K estimate
- US Empire manufacturing for August 4.8 vs 2.0 estimate
- US July advance retail sales +0.7% vs +0.3% expected
- China says that Xi and Trump are in touch via meetings, phones, letters
- The GBP is the strongest and the JPY is the weakest as NA traders enter for the day
A snapshot near the end of day is showing:
- Spot gold up $5.60 at $1521.86. There remains some global uncertainty which is helping to keep gold supported. The USD was mixed/marginally lower in trading today
- WTI crude oil fell -$0.52 or -0.94% at $54.70.
In the US stock market, the major indices are closing higher with the Dow and the S&P nearer session highs. The Nasdaq had a more up and down day falling -0.74% at the low and extending up 0.41% at the high. Late day selling has the index closing in the red at -0.09%. Cisco had it's worst day in about 8 years as forward guidance disappointed (top and bottom line beat expectations though). European shares ended the day in the red. Below is the summary of the major North American and European indices.
In the US debt market, the yields declined once again with the yield curve steepening in the shift lower. The 2 year moved down -9.8 bps. The 10 year was down -7.3 bps.
It is still hard for the US yields to go higher when German 10 years go out down -6.3 bps at -0.713%, France yields are at -0.438% and Spain yields at 0.035%. How about Portugal at 0.071%.
The US/China story today had China's Xi saying:
- We will retaliate if tariffs go into effect in September
- Let's meet half way
- Hong Kong is none of your business.
Pres. Trump said:
- A deal will be on US terms
- Xi should go talk to the protesters
- The US will win
Later in the day, it was reported from the Washington Post that Pres. Trump pressure Mnuchin to label China a currency manipulator. Last Friday, Peter Navarro created the Navarro Rule in a late day interview. The Navarro Rule is that if something is from unnamed sources, it is "fake news". This report was from a source with White House knowledge. But then again, China was not doing things that are presumingly needed to be labeled a manipulator. I don't know who to believe?
Nevertheless, the comments from Xi and Trump, seem to indicate a chasm exists between both countries.
Another key event that was an influence in the US markets was comments from ECB Rehn. He said:
- "It's important that we come up with a significant and impactful policy package in September"
- "When you're working with financial markets, it's often better to overshoot than undershoot, and better to have a very strong package of policy measures than to tinker"
Those dovish comments pushed up the probabilities for a 20 bp cut at the September meeting (10 bps is a done deal), and helped to shove the EURUSD below the 50% retracement level at 1.11377. The pair did not bottom until it reached a lower trend line at 1.1091 area (see chart below). The rest of the day traded between 1.1095 and 1.1120. The 1.1100 to 1.1109 was swing low from April, May and July. That area will be the barometer for the bulls and bears going forward into the new day.
In other news today:
- Retail sales were better
- Claims continue to show strength
- Empire manufacuring was stronger
- Philly index was stronger
- Q2 Productivity was stronger
- Industrial production was weaker
- NAHB housing index was little changed
- Inventories were about as expected.
The Atlanta Fed raised estimate for 3Q growth to 2.2% from 1.9% as a result.
