Forex news for North American trade on July 25, 2019
- ECB leaves key rates unchanged in July monetary policy meeting
- Draghi opening statement: Data point to somewhat weaker growth in Q3 and Q4
- Draghi Q&A: Outlook is getting worse and worse
- Advance goods trade balance for June -$74.17B vs -$72.5B estimate.
- US June preliminary wholesale inventories +0.2% vs +0.5% m/m expected
- US initial jobless claims for July 206K vs 218K estimate
- US June preliminary durable goods orders +2.0% vs +0.7% expected
- Juncker told Johnson withdrawal agreement won't be renegotiated
- PM Johnson spokesman: Current withdrawal agreement will not pass in current form
- ECB sources: Have concensus for new stimulus in September
- US sells 7-year notes at 1.967% vs 1.955% WI bid
- Canada and EU to set up alternative WTO dispute resolution panel
- KC Fed manufacturing index -1 vs 0 prior
- Atlanta Fed GDPNow model Q2 estimate lowered to 1.3% from 1.6%
Markets:
- Gold down $12 to $1413
- WTI crude flat at $55.89
- US 10-year yields up 3 bps to 2.60%
- S&P 500 down 18 points to 30002
- EUR leads, NZD lags
It was a busy day in terms of news starting with the ECB decision. The euro hit a two-year low on the statement, but only marginally. From there it couldn't break below 1.11 and buyers started to wade in. They came in more strongly when Draghi waffled on a few points, describing the economy intermittently as "worse and worse" while saying there was no reason to be gloomy. He also said the Governing Council didn't even discuss a cut today. The euro jumped to 1.1188 at the highs but slowly faded back to 1.1145, virtually unchanged on the day.
The broader theme in the latter part of the day was USD strength on growing fears/expectations that the Fed will be less dovish. USD/JPY rode that sentiment to a 45 pip gain on the day -- all in New York -- to 108.70. The same thing weighed on gold.
Cable was hurt after a call between Juncker and Johnson resulted in the UK PM learning that the EU wasn't willing to renegotiate the withdrawal agreement. That sets us up for a game of chicken or a hard Brexit if he wants to keep his promise to leave by Oct 31.
Risk trades were pressured on less-dovish central banks and that sent the commodity currencies lower. NZD was particularly hard hit as it sagged to 0.6662 in the fourth day of declines in the past five. Oil finished flat but USD/CAD still added to gains in a rally to 1.3158. The Aussie also sagged a quarter-cent to 0.6950.
EUR/CHF remains an intriguing spot with the SNB felling the heat of a strong currency. The pair led the euro rally higher with a few eyebrows raised. It climbed to 1.1045 from a two year low of 1.0962.
