Forex news for North American trade on September 20, 2019:
- China cancelled a planned agricultural trip to Montana, raising questions on trade
- Pres. Trump: China agricultural purchases are not enough
- Canada July retail sales +0.4% vs +0.6% expected
- German climate package will have neutral impact on govt finances
- Fed's Kaplan says he doesn't see another cut this year but is open minded
- Fed's Kaplan: If we wait to see evidence of weak consumer, will have waited too long
- Fed's Bullard: Shouldn't ignore market signals on a potential recession
- Baker Hughes US oil rig count 719 vs 733 prior
- Fed's Rosengren: Rate cut risks further inflating the prices of risky assets
- Fed's Rosengren: Data suggests economy healthy despite shocks
- Fed's Clarida: All the FOMC agrees economy is in a good place
- Johnson's proposals on Irish border "an utter waste of time" - report
- China's Xi calls on all parties to avoid escalating Saudi situation
- Belgian consumer sentiment falls to -11 from -9 in August
- CFTC commitment of traders: EUR shorts are being rebuilt over the last few weeks.
Markets:
- Gold up $17 to $1516
- WTI crude flat at $58.09
- US 10-year yields down 6.6 bps to 1.72%
- S&P 500 down 15 points to 2992
- JPY leads, NZD lags
The session turned on vague headlines about Chinese officials canceling a hastily-planned trip to visit Montana and Nebraska. The report said Chinese negotiators would be headed home instead.
The market was left to figure out whether this was the start of talks falling apart or some kind of scheduling conflict. Trump was also tepid at a press conference, saying that he didn't want an interim deal and was willing to wait until after the election.
Risk trades fell on the headlines and continued to slowly slump into the close. Yen crosses were hit harders with USD/JPY falling 40 pips to 107.55. NZD/JPY was under pressure all day but fell further to hit 67.31 and is now within striking distance of the lows of the month.
It was also the third day of declines for AUD/USD as it erases the early-September bounce and creeps close to the Sept/Oct triple bottom. The pair was higher early in the day but closed down 28 pips to finish on the lows on fear of a weekend trade blowup.
EUR/USD weakened from the start of European trade until the London close. Selling into the end of the day led to a small break of 1.1000 but it climbed back above afterwards.
Cable gave back Thursday's gain as the market had a second look at Juncker's comments and decided there was nothing new. Johnson's Irish border plans also began to leak and the outlook isn't promising.
Gold jumped on the trade headlines to finish at the highs of the week at $1515 in a quick $14 rally late.
One asset class that bounced off the lows was stocks as a deep loss was trimmed. I suspect that was partly due to the Powell put and partly due to quadruple witching. There was some last-second selling into the close but expect a gap to start the week when we get word -- one way or the other -- on China-US talks.
