Forex news for North American trade on August 23, 2018:
- Trump says market would crash if he got impeached
- China files WTO complaint against the latest US tariffs
- Eurozone August advance consumer confidence -1.9 vs -0.7 expected
- US July new home sales 627K vs 645K expected
- US August prelim Markit manufacturing PMI 54.5 vs 55.0 expected
- China commerce min says very concerned with Australia's 5G decision
- US FHFA June house price index +0.2% vs +0.3% expected
- US weekly initial jobless claims 210K vs 215K expected
- Fed's George says Trump criticism won't sway the Fed
- Fed's Kaplan: Trump isn't going to affect our decisions
- Canada's Freeland: Encouraged by optimism of NAFTA partners
- August KC Fed manufacturing index 14 vs 23 expected
Markets:
- S&P 500 down 5 points to 2587
- Gold down $10 to $1185
- WTI crude oil down 14-cents to $67.86
- US 10-year yields flat at 2.82%
- USD leads, AUD lags badly
If you were to look at stocks, bonds and commodities you would think it was a quiet day in FX but it most-certainly wasn't.
There was no big global economic news to drive the moves. If anything, the US data was on the soft side with housing numbers and the Markit PMIs soft. Fed talk skewed hawkishly as well.
So what was behind the dollar rally? I look to emerging markets. Trump tweeted about South Africa and it set off a 1.7% drop in the rand that was matched by a fall in the Brazilian real. Not a single emerging market currency in our tracking universe was higher on the day.
One spot that didn't get hit hard by the dollar was the euro, which generally held up after a drop in Asia. Still, it finished down more than 50 pips on the session and near the low at 1.1541.
USD/CAD was whippy. It was one of the first ones to be swallowed by the USD-bid in a rally up to 1.3080 from 1.3030 but the gains were erased into the options cut before a second wave of buying took the pair up to 1.3099 at the highs. Offers are protecting the figure but it's a tough battle the way things are going.
The day ahead should be interesting because this disconnect can't last. Powell speaks at 1400 GMT on Friday.
