Forex headlines for August 21, 2013:
- FOMC participants ‘broadly comfortable’ with taper ‘later this year’
- Wide, indecisive dollar swings after Fed minutes
- US July existing home sales 5.39m vs 5.15m expected
- India raises interest-rate cap on foreign currency deposits
- Former Fed Governor Kroszner says Sept taper not a done deal
- ECB’s Asmussen in Greece: No talk of 3rd bailout
- Merkel: No decision on Greece until 2014 or 2015
- Canada fin min: Canada is not a fan of quantitative easing
- Target warns on annual profit, cites cautious shoppers
- WTI crude down $1.15 to $103.96
- GBP leads, NZD lags
The market still isn’t sure what to make of the FOMC minutes. On the one hand, you have Fed members talking about a taper before year end; on the other, there is nothing to specifically indicate a September taper. Hints about lowering the unemployment threshold were also largely absent.
Let’s just call the reaction uneven. All US dollar pairs have whipped back-and-forth in roughly 50-pip ranges. The latest move is higher for the dollar but the daily extremes haven’t been broken except for the slumping commodity currencies. I have more on CAD here.
Aside from the Minutes volatility, EUR/USD tracked lower through the day. After hitting 1.3450 it’s been a steady slide lower and spot is now close to 1.3350. Support is in the 1.3310/20 zone which matches the lows on Friday and Monday.
USD/JPY was a bit more subdued than other pairs as offers ahead of 98.00 cap the upside.
Aside from the Fed, the real story is emerging markets and the ongoing turmoil. The fear is hitting the commodity bloc and AUD, CAD and NZD all appear headed toward the lows of the year.