Forex news for NY trading on August 22, 2019
- Fed's Kaplan. Sees risks to the downside.
- Pres. Trump to hold meetings on sidelines of G7 with Britain, France, Germany, Canada...
- US WTI crude oil futures settle at $55.35
- Hu Xinjin China Global Times: All is ok in China. Thought it might be worse.
- Italy's Mattarella: Government crisis needs solving quickly
- Bitcoin has trouble on dips below the 100 day MA
- Italy's DiMaio: Started talks to form a majority, but....
- European shares are ending the day mostly in the red
- Kansas City Fed composite index for August -6 versus -1 last month
- Macron/Johnson agreed to continue exchanges until and September on Brexit
- Bundesbank sees no need for German fiscal stimulus right now
- Pres Trump: Fed can make the US economy "Record Setting!"
- Fed's Harker: Fed needs to do what is appropriate for the US
- US leading index for July 0.5% versus 0.3% estimate
- EU consumer confidence for August -7.1 versus -7.0 estimate
- Markit manufacturing PMI for August 49.9 versus 50.5 est
- Pres. Trump keeps the pressure on Fed ahead of Powell's Jackson Hole speech tomorrow
- Merkel: Can also find a backstop solution by October 31
- US initial jobless claims 209 K vs. 216K estimate
- Canada June wholesale trade sales +0.6% vs -0.2% expected
- The GBP is the strongest and the NZD is the weakest as NA traders enter for the day
The US stocks ended the day with mixed results:
- The S&P index fell -0.05%
- The Nasdaq index fell -0.36%
- The Dow rose 0.19%
The major indices each had up and down days with changes above and below the 0.0% line today. European shares ended mostly lower with Spain's Ibex and the Portugal PSI 20 eking out small gains.
There were a couple dynamics in play in the US session today.
For one, there was a comment early from Germany's Merkel that there could be a deal done before the October 31 drop dead date. That sent the GBPUSD (and other GBP pairs) higher (the GBP was the runaway strongest currency on the day). Now, the comments were later interpreted to be more of a statement of fact vs. a belief that in reality it could happen (i.e., in reality, there could be a deal), but the gains in the GBP remained. For the GBPUSD, it moved to the highest level since July 29. Today the price moved from a close yesterday of 1.2120 to a high of 1.2273, before settling at 1.2253 at the close.
For the EURGBP, it tumbled (higher GBP) to a low of 0.9027 (also the lowest level since July 29. The price closed at 0.9140 yesterday. So it too had a healthy move on the day.
The other catalyst for the day came from comments from Fed speakers. Now, the forex markets were not necessarily deeply influenced by the comments, but with Fed's Powell speaking tomorrow at Jackson Hole, the comments today from Fed members were probably more on the hawkish (i.e. not as dovish) as what the markets had priced in.
The market is still pricing in a 100% chance of a cut in September, but the odds of 50 bps - which was close to 40% at the highs - is down to 2.9%
The dollar did not exactly race higher but it remains up vs the AUD, NZD, CHF and marginally vs the EUR and CAD. It fell vs the JPY and the GBP today.
Tomorrow Chair Powell is expected to speak at 10 AM ET. Also Bullard and Mester are to speak on CNBC as well. However, the focus will be on the chair. Is the dollar waiting for his words tomorrow before moving? The EURUSD range for the week is 49 pips. The USDJPY is 54 pips. The USDCHF is about 90 pips. The AUDUSD range is 49 pips. All are relatively narrow. So we could be in store for a rock n roll type of day in the currency markets.
