Forex news for North American trading on December 6, 2018:
- WSJ: Fed likely to raise in December but could step back from rate path
- Theresa May's team has discussed second referendum - report
- OPEC decision delayed until Friday
- US October factory orders -2.1% vs -2.0% expected
- US ISM non-manufacturing index for Nov. 60.7 vs 59.0 estimate
- Canada November Ivey PMI 57. vs 61.8 prior
- US November final Markit services PMI 54.7 vs 54.4 expected
- Poloz: Current level of rates appropriate for the 'time being'
- US nonfarm productivity 3Q final 2.3% vs 2.3% estimate
- US initial jobless claims 231K vs 225K estimate
- US October trade balance -$55.5B vs -$55.0B expected
- Canada October international merchandise trade -$1.17B vs -$0.73B expected
- US household debt rose at 3.4% annual pace in Q3
- Atlanta Fed GDPNow Q4 forecast 2.7% vs 2.8% prior
- US weekly oil inventories -7323K vs -2000K expected
- Fitch affirms South Africa at BB+ with a stable outlook
- French government considering delaying planned 2019 corporate tax cut - report
Markets:
- CHF leads, AUD lags
- S&P 500 closes down 4 points after falling as much as 79 points
- US 10-year yields down 2 bps to 2.89% after falling as low as 2.82%
- Gold up $1 to $1238
- WTI crude oil down $1.22 to $51.67
It was an epic day in the stock market. Futures were pointing to a substantial selloff but it quickly morphed into a brutal drop after the open. The motivation was the arrest of Huawei's CFO in what looks like a troubling escalation in US-China tensions.
With the drop in stocks, USD/JPY fell to 112.24 from 112.75 at the start of US trading. However support at the October low and the late-breaking dovish Fed report combined to spark an epic turnaround and the S&P 500 finished fractionally lower with the Nasdaq rebounding to close +0.4%.
The bond market continues to be a major contributor to volatility as the front-end led the rally today. The derivatives market is pricing out Fed hikes and now even December is up for debate.
EUR/USD rallied in Europe and climbed above 1.1400 but the flight to safety sent it down to 1.1360 before a chop to 1.1380.
Cable popped to 1.2812 late in the day on a story about discussions of a second referendum but buried in the story was a part saying May loses her temper any time someone brings it up. Cable finished up a half-cent to 1.2785.
The commodity currencies were beaten up early and USD/CAD rose to a 17-month high with oil down on OPEC worries. But as sentiment turned so did the pair and it sank to 1.3355 from 1.3445.
AUD and NZD were less volatile. After falling to a four-week low, AUD/USD rebounded 35 pips from the lows.
