powell airplane pilot meme


  • Gold down $5 to $1903
  • US 10-year yields down 16 bps to 3.375%
  • WTI crude oil down $1.13 to $79.05
  • S&P 500 down 61 points to 3931
  • GBP leads, CAD lags

Bad news is good news ... to a point. We may have reached that point on Wednesday as a poor retail sales report (control group -0.3% vs -0.7% exp) initially kicked off a risk rally but it reversed in a big way midway through trading. Comments from Bullard and Mester also got some of the blame for the turnaround but that's a stretch to these eyes.

The one-way trade in equities to start the year came undone and it was most-evident in commodity currencies in FX as AUD/USD rallied to 0.7063 only to turn around and fall to 0.6937. USD/CAD ran all the way to 1.3500 in a two week high as the market begins to worry about the BOC of Canada decision next week. Implied pricing puts a 33% chance of no change and that figures to be a hot topic in the week ahead.

The pound remained the top performer on hot wage data but it gave back a big part of the rally, falling 100 pips from the highs in the latter part of the day to 1.2338.

The euro ends the day flat at 1.0789 after trading 100 pips higher initially after the US retail sales report. There's something of a flight to safety ongoing mixed in with a bond short squeeze engineered by the Bank of Japan. Yields moved sharply lower globally and that's a tough signal to read right now.

A less tough one is oil, which reversed from $82.38 all the way down to $79.17 in the final four hours of trading.

We might be entering a period of kicking and screaming until central banks acquiesce to market pricing on interest rates. That could be a battle. Or we could just be seeing more angst ahead of US earnings season with Netflix set to report Thursday after the close.

FX n wrap