Forex headlines for December 11, 2013:
- RBNZ holds rates but says hikes are coming
- Stanley Fischer said to be leading candidate for Fed #2 job
- House to vote on budget deal Thursday, positive vote seen as likely
- BOE’s Weale: Higher rate expectations reflect growth not guidance
- ECB’s Coeure says can’t exclude further monetary easing
- ECB’s Constancio sees no shortage of collateral in eurozone
- US govt Nov monthly deficit $135B vs $140B exp
- Gold down $8 to $1253
- WTI crude down $1.08 to $97.43
- US 10 year yields up 4 bps to 2.84%
- S&P 500 down 20 points, or 1.1%, to 1782
- JPY leads, AUD lags
The euro rose to 1.38 for the first time in six weeks, rising to 1.3811 before offers ahead of the October high of 1.3830 stopped the rally. A wave of risk aversion hit the markets later in the day and that sparked some selling down to 1.3789.
The broad idea is that a budget deal makes a taper more likely next Wednesday and that weighed heavily on stocks. The theory doesn’t hold up as well in FX, where the dollar wasn’t particularly strong. Bonds sold off only slightly but considering the slump in stocks, I suppose that’s impressive.
In any case, USD/JPY chopped as low as 102.14 but disconnected from stocks later in the day to rebound to 102.63 before falling to 102.40.
Cable took a swift hit down to 1.6339 but rebounded all the way to 1.64 after the European close.
The commodity complex was under pressure all day, led by AUD/USD, which erased most of the recent optimism and fell to 0.9050.
NZD/USD jumped because of no effort to play down expected rate hikes in the RBNZ decision. It shot to 0.8285 from 0.8235 but poor risk appetite late in the day sapped the gains down to 0.8257.
