Forex news for Americas trading on October 18, 2019:
- Fed's Clarida: US economy in a good place but faces 'evident risks'
- Draghi: ECB continues to stand ready to adjust all of its instruments
- Parliament might not even have a clean vote on his deal Saturday
- BOE's Carney says he sees many different possibilities after Brexit
- Fed's Kashkari: Since the last Fed meeting, economy data has come in softer
- Fed's Kaplan repeats that he's agnostic about Oct cut
- Fed's George: Rate cuts may boost financial risks
- Macron: UK must not get Brexit extension if parliament vote fails
- Fed's Kaplan: Global growth is decelerating, cites trade tension
- Canada Sept Teranet house price index +0.7% vs +0.6% y/y prior
- BOE's Haldane sees prospects for significant investment uptick
- Fitch affirms UK credit rating but retains ratings watch for downgrade
- US weekly US oil rig count 713 vs 712 prior
- CFTC Commitments of Traders: Pound shorts haven't been squeezed...yet
Markets:
- Gold down $1 to $1490
- US 10-year yields flat at 1.75%
- WTI crude down 19-cents to $53.74
- S&P 500 down 12 points to 2986
- NZD leads, USD lags
The pound was helped by a steady stream of Labour and dissident Conservative MPs saying they will support the Brexit bill. It still doesn't seem to be across the finish line but it's getting closer. At the same time, the vote may be delayed because of an amendment that will force Boris to request the extension before it takes place. That will further limit the risk of a no-deal Brexit. Cable finished at 1.2945, which was close to the best levels of the day as it climbed 50 pips in the final hours of North American trade.
More broadly, we were closely watching for signs of the Fed pushing back on the 81% chance of a cut priced into the market on Oct 30. The thinking is that the Fed would not defy a market that's priced so aggressively without warning. The blackout starts tomorrow so Clarida's speech was the last chance to push back. He said the usual meeting-by-meeting rhetoric but didn't say anything that was surprisingly hawkish so the market took that as a greenlight to sell dollars. The euro led the way as it extended its recent strength in a climb to 1.1167. IT also finished at the best levels of the day/week/month in a positive sign.
The commodity currencies also benefited from dollar softness and all finished at the best levels of the week. USD/CAD fell through the Sept low despite the decline in oil and risk appetite. However the antipodeans outperformed the loonie -- likely on modest Canadian election worries (the vote is Monday).
The risk trade wasn't a part of the dollar slide as stocks fell and USD/JPY declined for the third day to hit 108.24 in a quarter-cent decline.
Have a great weekend and check back Saturday to find out what happens in UK parliament tomorrow.
