Forex news for North American trading on December 4, 2018:
- Fed's Williams: At some point it will be less obvious the Fed needs to raise rates
- Williams: The US economy is strong
- Kudlow: Technology issues are the most-important in talks with China
- Kudlow: Auto tariff agreement is coming, hasn't been sealed yet
- BOC names professor Paul Beaudry as new deputy governor
- UK parliament gives itself power to vote on Brexit options in Dec 11 vote fails
- Brexit: May's government loses vote on contempt of parliament
- Top Republican officials' emails were hacked this year - report
- US November ISM New York business conditions 67.8 vs 69.8 prior
- New Zealand GDT dairy auction results +2.2%
- Canada Q3 labor productivity +0.3% vs +0.2% q/q expected
Markets:
- S&P 500 down 90 points, or 3.2%, to 2700
- Russell 2000 suffers worst day since November 2011
- US 2-year yields down 2.6 bps to 2.79%
- US 30-year yields down 9 bps to 3.16%
- Gold up $8 to $1238
- WTI crude flat at $52.89
- JPY leads, CAD lags
It was an ugly one.
Risk assets were battered with stocks leading the way. There wasn't a clear trigger for the rout but worries about tariffs and the Fed were factors, particularly Williams who sounded ready to hike another four times next year.
The FX market was much more orderly than stocks and bonds. The sharp drop at the long end at one point looked particularly messy with yields down by 13 basis points at one time. Talk of curve inversion is rampant.
Naturally, the yen had a massive bid, particularly against the commodity currencies. CAD/JPY was up more than 100 pips. USD/JPY fell 88 pips to 112.78 in a drop that wipes out last week's gains.
The S&P 500 finished just off the lows and briefly broke 2700 with fresh selling hitting late. Note that the US market is closed tomorrow from a national day of mourning for George H.W. Bush and that will delay most of the scheduled economic data.
The pound had its usual self-inflicted problems with May losing a vote that was seen as a preview of the Dec 11 Brexit vote. That sent cable below 1.2700 to a low of 1.2659, which was fractionally and very briefly below the August low. It rebounded to 1.2713 late in part because of a separate parliament vote where lawmakers gave themselves power to make some changes on a no-Brexit deal.
EUR/USD had been above 1.1400 as US traders arrived but it faded with risk trades in a fall to 1.1341.
