Forex news for New York trading on September 13, 2016:
- Bank of Japan leaks hit
- ECB's Lautenschlager: Monetary policy is working, we are approaching our goal
- August US monthly budget statement -$107.1 billion vs -$107.0 billion expected
- US sells 30-year bonds at 2.475% vs 2.465% WI
- PBOC's Yi: Negative rates have limits but are a valid policy choice
- Fed's Lockhart will be stepping down Feb 28th
- Brexit's Davis won't trigger article 50 before his ministry is fully staffed
- No one is talking about $120 billion kink in the global supply chain
- Lagarde: 2016 will be fifth consecutive year of global growth below 3.7%
- Fmr Fed Governor Warsh: The Fed Chair has a lot of votes in her pocket
Markets:
- Gold down $9 to $1319
- WTI crude down $1.33 to $44.96
- S&P 500 down 31 points to 2127
- US 10-year yields down 5.5 bps to 1.72%
- USD leads, NZD lags
What's unique about the latest rout in stock markets is that it's accompanied by a big slump in bonds as well. Worries about a Fed hike made sense last week but after the dovish comments from Brainard, that can't explain it all.
There's a renewed focus on the BOJ and other global central banks. The most market-moving headlines were from Nikkei as they had some leaks about what the Bank of Japan is thinking. They drove the yen lower.
The Nikkei story hit at the same time as a soft Treasury bond auction. The sale drove up 30-year yields by 6.5 basis points to 2.46% and that transmitted into a USD/JPY bid as well.
The ongoing global selloff in bonds is one of the stories but there is a 'sell everything' mode as well as markets get jittery.
The commodity currencies were hit especially hard by the US dollar bid. The Aussie dollar failed to capitalize on good Chinese data yesterday and was sent lower. AUD/USD started the US session at 0.7525 then skidded down to 0.7441, which is just above a cluster of support near the July low, the 200-dma and the uptrend since the start of the year.
USD/CAD took advantage of weak oil. Crude suffered on bearish comments from the EIA. It was the fifth day of gains for USD/CAD as it climbed to 1.3185 at the best levels of the day compared to 1.3100 when Toronto arrived.
Cable was in play once again as it slid down to 1.3161 at the lows. That's the worst level since Sept 1.
