Forex news for North American trade on February 19, 2020:

Markets:

  • Gold up $10 to $1612
  • WTI crude oil up $1.23 to $53.28
  • US 10-year yields flat at 1.56%
  • S&P 500 up 16 points to 3386
  • CAD leads, JPY lags

The story today was a dramatic slump in the yen across the board. It fell more than 1% against everything except the pound, which is battling its own demons.

In USD/JPY it was a relentless bid after 110.00 broke as technical buyers pushed it up to 111.60 with hardly a single step backwards until late in the day when it gave back 35 pips. I outlined a number of reasons for the moves but there's no definitive answer. Even if you separate out the strong move higher in risk assets, you still have things like gold rallying and AUD struggling.

It's a time in market when there is a real struggle for answers. Coronavirus certainly isn't as bad as it could be right now but all roads lead back to central bank easing and government spending. With the slump in Japan, you look to the MOF and BOJ and who knows what sort of tricks they will try next.

In the UK, it's the same kind of thing in play but no one knows what the BOE and Boris will do. What looked like more stimulus is now looking uncertain and yet-another civil war in the Conservative party begins to unfold. The pound has now given up all the Javid bounce and more. Some of that is an illusion because it's USD strength but cable at 1.2925 isn't exactly inspiring.

Speaking of the dollar, the Dollar Index broke the October high and rose to the best levels since 2017.

One currency that was able to outperform the US dollar was the loonie as oil prices rose more than 2%. The CPI numbers were mixed as the core sagged but the combination of energy and risk appetite was a tailwind for USD/CAD in a choppy day that saw it finish 30 pips lower.

AUD wasn't so lucky as it fell for the third day and now sits just above the February low, which was the worst in a decade. The jobs report is due out later.

I'm off for a couple days of downhill skiing -- something this market will be doing soon. See you Monday.

Forex news for North American trade on February 19, 2020: