Forex headlines for October 23, 2013:
- Bank of Canada drops hawkish bias
- BOC Governor Poloz says more negative information on inflation could shift balance toward rate cuts
- Draghi: ECB won’t hesitate to fail banks in stress tests
- August US FHFA house prices 0.3% vs 1.0% prior m/m
- US import prices up 0.2% m/m, as expected
- Caterpillar reports sharp declines in Q3 sales
- October EZ consumer confidence -14.5 vs -14.4 exp
- Fitch affirms Portugal at BB+ with a negative outlook
- Berlusconi ordered to stand trial for corruption, bribing a Senator
- S&P snaps 5 day streak, down 0.5% to 1746
- Gold down $6 to $1333
- WTI crude down $1.39 to $96.91
- JPY leads, NZD lags
Impressive day for the euro. When US traders came in, the question was if the US dollar rebound could continue. The answer: nope. EUR/USD slumped to 1.3740 after some failed tests of 1.3800 in Asia but US traders bought the tip back up to 1.3793. Look for a swift move up on a break of 1.3800. Last at 1.3777.
The bounce in cable was less impressive. The pair fell to yesterday’s low at 1.6120 and bounced a solid 60 pips but nowhere near enough to retest the overnight high naer 1.6250. Last at 1.6165.
USD/JPY was generally quiet in US trading. There was talk about an expiry at 98.00 pulling the pair higher but there was minimal effect at the US high was 97.48. The low was 97.21. What’s encouraging for the USD/JPY bulls was the lack of follow through on the break of the 200-day moving average. Still, it’s the first break of the mark in 11 months. Last at 97.36.
USD/CAD was in the spotlight because of the BOC decision. Policymakers warned about downgraded growth forecasts and they cut them even more than expected. Officials also removed a hawkish tilt. After the decision the pair rallied to 1.0385 from 1.0330. A test of 1.04 was pushed back but there is a sizeable expiration there tomorrow.
CHF got some attention. USD/JPY broke the Feb 2012 low and sparked broad CHF buying. EUR/USD slumped below 1.2300.
