Forex news for North American trade on January 3, 2020:
- US December ISM manufacturing 47.2 vs 49.0 expected
- US November construction spending +0.6% vs +0.4% expected
- Trump: Soleimani was plotting imminent attacks on US diplomats and military
- FOMC minutes: Rates likely to remain appropriate for a time unless there's a material change
- ISM New York business conditions 39.1 vs 50.4 prior
- Germany December preliminary CPI +1.5% vs +1.4% y/y expected
- Fed's Daly: There is a global slowdown in trend growth
- Fed's Mester: She expects new inflation framework mid-year
- Baker Hughes US oil rig count 670 vs 677 prior
- Fed's Barkin: 'Imagine an escalation with Iran' as a possible shock
- US weekly crude oil inventories -11463K vs -3000K expected
- Fed's Evans: Fundamentals for the US economy are good
Markets:
- Gold up $20 to $1549
- WTI crude up $1.81 to $62.99
- US 10-year yields down 9 bps to 1.78%
- S&P 500 down 23 points to 3234
- JPY leads, GBP lags
Surprise was the word of the day as risk trades dumped in Asia on the surprise attack on Iran's top military official. In US trade the US dollar was generally softer as the euro bounced back to 1.1175 from a low of 1.1125 just before New York's arrival and as USD/JPY shed another 50 pips.
USD/JPY hit the lows of the day after the surprise drop in the ISM manufacturing survey. The commentary in the report was more balanced but the headline hit the worst level in a decade, raising big questions about any manufacturing recovery this year.
Cable remained in the doldrums and gave up another 70 pips. Notably, GBP/JPY sits right at the post-election lows.
Late in the day rumors started doing the rounds of an Iran response to the US assassinations but despite some tweeting from a NYT reporter, the news was false. Before it was debunked, gold touched above $$1550 and crude oil bounced. Interestingly, crude was able to hold much of the gains.
Commodity currencies were weak with the Aussie and kiwi significantly underperforming the loonie, which was buffeted by oil. However AUD and NZD both bottomed before New York trade and recouped about 20 pips over the course of the day.
Have a great weekend!
