Forex headlines for March 13, 2014:
- ECB’s Draghi says euro exchange rate increasingly relevant in assessment of price stability
- US retail sales Feb m/m +0.3% vs +0.2% exp, revisions lower
- US initial jobless claims 315k vs 330k exp
- US promises ‘serious’ steps against Russia on Monday if Crimea holds referendum
- Several firms downgrade Chinese and Russian growth forecasts
- January US business inventories 0.4% vs 0.4% exp m/m
- Canadian new housing price index Jan m/m +0.3% vs +0.1% exp
- February US import prices 0.9% vs 0.4% exp m/m.
- Acting Ukraine president sees risk of war with “Russia ready to invade”
- RBNZ’s McDermott says moderate rate rises preferrable over next couple of years
- Stanley Fischer says Fed has to ‘adjust’ to reactions of the market
- US 30-year bonds sell at 3.630% vs 3.615% expected
- Key US Senators announce 5-month unemployment insurance deal
- Goldman Sachs cuts 12-month AUD/USD forecast to 80-cents
- S&P 500 down 22 points to 1846
- WTI crude up 22-cents to $98.21
- Gold up $5 to $1372
- JPY leads, EUR lags
It was the kind of day where a trader could make a fortune before lunch and then give it all back by dinner, or vice versa. Risk trades looked solid heading into the day after the RBNZ rate hike and blockbuster Australian employment report. In the stock market, M&A kept the bullish story intact and China worries cooled.
US economic data added to the positive case, especially jobless claims falling to the lowest since November in the second consecutive strong report. Retail sales were a touch on the downside but weather was an easy excuse. AUD/USD momentum continued in the early going, knocking through 0.9100 and NZD/USD hit a high above 0.8600.
The euro was the star earlier in Europe, hitting 1.3967 but it remained close to that level in US trading.
USD/JPY took a run at 102.80 and all seemed right in the world.
It began to unwind with a second look at retail sales. Digging deeper, there wasn’t much to like in the report and a few firms cut US GDP forecasts. It seemed that far too many traders were positioned for a snap-back in economic data and there’s no guarantee it will come.
It was also one of those rare days when the New York Times moved the market as a feature story about Russian troops amassing at the Ukranian border circulated. From there, the regular rumors and half-stories about violence or sinister plans in the Ukraine took over. Kerry’s promise of retaliation on Monday was vague but it had a deadline and that’s more than any threat so far. In the end, there was no single headline that caused sentiment to sour and it was a slow, steady bleed.
USD/JPY sank as far as 101.53 but big bids at 101.50 held the line. AUD/USD slumped back to 0.9025 and NZD/USD fell to 0.8520. Cable made a round-trip from 1.6615 to 1.6715 and back. On the whole, reversals appeared all over.
The euro got an extra kick lower from Draghi, who muttered and jawboned against the euro for the first time in months. His comments alone sent EUR/USD down to 1.3846 from 1.3900. Earlier in the day, the pair was up at 1.3967 — a two-year high.