Forex news for January 12, 2017
- US initial jobless claims week 247k vs 255k exp
- Philly Fed Dec business conditions index revised to +19.7 from +21.5
- Canada new housing price index +0.2% vs +0.3% m/m expected
- US Dec import price index +0.4% vs +0.7% expected
- US December federal budget statement -$27.5B vs -$26B expected
Fed talk
- Harker starts the reinvestment debate
- Fed's Harker: Supports three rate hikes in 2017
- Fed's Kaplan: Sees economy growing more than 2% in 2017 even without fiscal support
- Fed's Evans: Median estimate of 3 rate hikes this year is plausible
- Fed's Bullard: Expects more of the same in 2017 with inflation near 2%
- Fed's Bullard: Sees little reason to change rates as Fed closes in on goals
- Fed's Bullard: We can afford to be patient with inflation below goal
- Fed's Lockhart: 4.6% to 4.7% feels like near full employment
- Fed's Lockhart: Businesses in his region are optimistic
Other news
- US sells 30-year bonds at 2.914% vs 2.915% WI bid
- ECB's Villeroy: Eurozone growth will be solid in 2017
- Germany fin min says tax cuts coming
- ECB minutes: Headline inflation is picking up significantly
- Germany's IFO expects Q1 2017 GDP of around 0.5%
Markets
- Gold up $4 to $1196
- WTI crude up $0.84 to $53.09
- S&P 500 down 7 points to 2268
- US 10-year yields down 1.6 bps to 2.35%
- NZD leads, GBP lags
The US had been beaten up in Asia and Europe on the follow-through to Trump's press conference yesterday but it stabilized in US trading and made a modest recovery late in the day.
The sexy angle in the markets is to attribute everything to Trump but that ignores the drama in the bond market after a very strong auction yesterday. That ramped up the USD selling and it carried over to today. The market was worried about a $12B T-bond auction but it came in right on the screws. That mitigated the worries and afterwards the dollar and stocks made a decent comeback.
The lows of the day for the dollar came early in Europe and were retested as the US arrived but offers ahead of 1.07 contained EUR/USD and USD/JPY wasn't interested in breaking 113.75 just yet. From there, the euro tracked down to 1.0613 to finish just 30 pips higher on the day and USD/JPY recovered nearly 100 pips.
Cable was a different story. It had been riding the way of USD weakness but a report that Theresa May will deliver a Brexit speech on Tuesday sparked a 40 pips move lower that continued until late in the day. Cable looks to finish more than 150 pips from the best levels of the day and at a session low of 1.2160.
The Canadian dollar was an interesting case. The USD/CAD chart is breaking down from a channel that began last May. A quick 100 pip drop hit in Europe and it was aided by oil but a wave of fixing demand for USD sparked a recovery to 1.3150 from as low as 1.3030.
The Australian dollar was its usual solid self but the range was narrow around 0.7500. Some selling has crept in late in the day but the 15 pip move is negligible compared to the drama elsewhere.
