Forex news for New York trade on April 15, 2020:
- US March retail sales -8.7% vs -8.0% expected
- Empire manufacturing index for April plunges to -78.2 vs -35 estimate
- Canada Q1 GDP flash estimate -2.6%
- Bank of Canada launches additional QE in provincial and corporate bonds
- Poloz Q&A: It's impossible to judge when economy will recover
- Poloz statement: Commodity-producing countries are being hit twice right now
- Crude oil inventories build 19.248M vs 12.7M estimate
- CDC reports a jump of 2,330 new deaths to 24,582
- Fed Beige Book: Activity contracted sharply and abruptly across all regions
- France reports 1,438 new virus deaths in worst day yet
- New York coronavirus deaths 752 vs 778 yesterday
- Germany will start opening small businesses next week, schools in May
- Italy virus deaths 578 vs 602 a day ago
- US business inventories for February -0.4% versus -0.4% estimate
- US April NAHB housing market index for +30 versus +55 estimate
- US March industrial production -5.4% vs -4.0% expected
- Canada March existing home sales -14.3% vs -10.0% expected
Markets:
- Gold down $6 to $1720
- WTI crude oil up 27-cents to $20.38
- US 10-year yields down 12.5 bps to 0.63%
- S&P 500 down 63 points to 2783
- USD leads, AUD lags
The US dollar started New York trading with a big bid, particularly against the commodity currencies but the rally peaked early and faded later.
It was a tough one to explain. There was undoubtedly an element of risk aversion and an element of mean reversion. AUD/USD had rallied 7 days in a row coming into today so a drop was probably overdue. The pair fell as low as 0.6284 but rebounded to 0.6320 late in the day.
I look to funding markets and skews there for commercial paper and the cross currency basis. That's driving some flows. There is also a large amount of uncertainty so momentum takes over.
Another reason it may have stalled is a dire reading on the Empire Fed. It's one of the most real-time numbers on the economy and not only did it hit a record low, but it more than doubled the old all-time low of -34.3. Clearly economists are having a tough time getting a handle on what's happening the economy, and so are market participants.
Within the retail sales report there were also troubling details. Grocery sales and essentials spiked by clothes, cars and electronics were hammered, down around 50%. That's in a month where the economy was open for two weeks.
Cable was particularly volatile as it dropped to 1.2440 from 1.2600 and then bounced almost all the way back before finishing near 1.2530.
USD/CAD was one currency that didn't bounce and that was because the BOC launched a few new programs, including buying corporate bonds and provincials. Poloz said more could come as well. A big build in US oil inventories kept pressure on the loonie as well.
