Forex news for North American trade on May 1, 2020:
- Tiff Macklem named next Bank of Canada governor
- US April ISM manufacturing 41.5 vs 36.0 expected
- CDC says 2349 Americans died from COVID-19 yesterday
- Baker Hughes US oil rig count 408 vs 465 prior
- Fed's Bullard: We'll get back to normal in H2
- UK coronavirus deaths rise by 739 in the past day
- New York coronavirus deaths 289 vs 306 a day earlier
- Fed's Barkin: Weak global economy hurts other nations more than US
- Elon Musk: The TSLA stock price is too high in my opinion
- Incoming BOC gov Macklem: Negative rates among tools at BOC
- US construction spending for March +0.9% versus -3.5% estimate
- US final April Markit PMI 36.1 vs 36.7 expected
- CFTC commitments of traders: EUR net long position remains the largest speculative position
- Canada April Markit manufacturing PMI 33.0 vs 46.1 prior
Markets:
- Gold up $13 to $1700
- WTI crude up 85-cents to $19.69
- S&P 500 down 81 points, or -2.8%, to 2830
- US 10-year yields down 1 bps to 0.63%
- CHF leads, AUD lags
The Bank of Canada appointed former Carney deputy Macklem as governor in a surprise move and he didn't waste any time in acting like a rookie central banker. He highlighted that negative rates were in the playbook and sent the loonie lower but failed to properly communicate the nuance of what he was trying to say, and that was that he wasn't planning on using negative rates. USD/CAD gained about 90 pips on the comment and eventually gave back about half of it.
In general, the US dollar was soft early in the day and technicals came into play as EUR/USD broke above the mid-April high of 1.0991 broke and the pair ran to 1.1018 before giving back 40 pips of gains later.
One of the most-mysterious moves of the day was an announcement that the BOE would move the May 7 decision up by 4 hours. As for sterling, it rose sharply yesterday in what looked like heavy fixing demand and as I warned at the time, the trade was to fade it. It almost completely unwound today with cable down 100 pips.
USD/JPY finished the day down 30 pips on risk aversion but the move came almost entirely before the US arrived. The pair did get a small bid ahead of and just after the ISM data, which was a bit better than expected.
The big losers on the day were the antipodeans as they slumped steadily and particularly after London went home. The seasonals aren't pretty for AUD or NZD.
Have a safe, healthy weekend.
