Forex new for NY trading on August 5, 2019
- Crude oil futures settle at $54.69
- Fed's Senior loan officers survey for the month released
- Fed's Brainard: Monitoring developments closely
- The chance of a 50BP cut in September is up to 39%
- China does not rule out placing tariffs on US agricultural products
- China Global Times editor tweeting: China targeting farmers
- European equity close: DAX sits at major support
- RBA to take a breather on Tues, RBNZ to cut Wed - BAML
- Gold continues run higher (up 2% on the day)
- The dollar is starting to weaken across the board.
- What's priced in for the Federal Reserve now
- July US ISM non-manufacturing 53.7 vs 55.5 expected
- US July final Markit services PMI 53.0 vs 52.2 expected
- Oil sinks to the lows of the day on global growth fears
- As if the Fed didn't have enough problems: Williams faces leadership questions
- The CHF is the strongest and the AUD is the weakest as NA session begins
- Trump calls weaker yuan a 'major violation'
A snap shot of other markets near the close are showing:
- spot gold, up $27.11 or 1.88% at $1467.70
- WTI crude oil is trading down one dollar or -1.82% $54.64
- Bitcoin on Coinbase is trading up $889 and $11,837.64
Today is all about US/China trade war.
The Chinese "retaliated" for the Trump tariffs, by setting the reference rate above the key 7.000 level today. Later in the NY session, China state media said that China does not rule out placing tariffs on US agricultural products, and that China firms have paused the purchase of US agricultural products.
Meanwhile, Pres. Trump called China a currency manipulator and at the same time, put more blame on the Fed tweeting:
"China dropped the price of their currency to an almost a historic low. It's called "currency manipulation." Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!"
All that got the ball rolling to the downside in global equities with the European indices all ending down sharply. The UK FTSE was the weakest of the Europeans at -2.47%. but France's CAC and German DAX also fell sharply (-2.19% and -1.80% respectively). Those declines were nothing compared to the US major indices which are seeing stocks falling over 3% (with an hour to go in trading left).
The snapshot of the US market with an hour to go in trading is showing:
- The Dow down -870 points or -3.3% (-895 points at the low)
- The S&P down -98.5 points or -3.35% at 2834
- The NASDAQ composite index down 310 points or -3.87% at 7697 (
(ps. closing price update below)
The risk off sentiment was also evident in the US debt market where yields plummeted and the curve flattened a few bps. The two year fell -12.7 basis points, while the 10 year yields fell -10.6 basis points to 1.7396%. That level is the lowest since November 2016.
Gold prices were sharply higher (up $27) and crude was lower (but off lows -$1.00) which is congruent with the risk off flows.
In the forex market, the USD was lower,but off the lowest levels of the day. The dollar fell the most vs the EUR, and CHF (-0.87 and -0.91%) but also fell against the JPY (-0.56%). It is ending the day higher vs the AUD and GBP, and near unchanged vs the CAD and NZD (in up and down trading for those pairs).
Markets will likely remain very skittish and also susceptible to tweets, and headlines from both China and the US. What might be key going forward is if there are other meeting scheduled going forward.
In economic news today, the date it was not necessarily that supportive of the US dollar either.
July US ISM non-manufacturing 53.7 vs 55.5 expected.
Major US stock indexes close:
- S&P index down 87.99 points, which is -3.00% at 2,844.06
- NASDAQ index down 279.54 points or -3.49% at 7,724.53
- Dow down 772.89 points or -2.92% at 25,712.12
