Forex news for New York trade on Monday, June 25, 2018:
- Navarro: US will defend itself against threats to its technology but no plans to block investment
- China's President warns CEOs that he's done turning the other cheek
- Mnuchin denies stories on China-specific investment restrictions
- June Dallas Fed manufacturing index 36.5 vs 23.0 expected
- US May new home sales 689K vs 667K expected
- BOJ's Sakurai reminds everyone that the Phillips curve doesn't work in Japan
- IMF forecasts Austrian GDP growing around 3% in 2018
- May Chicago Fed national activity index -0.15 vs +0.30 expected
Markets:
- S&P 500 down 38 points to 2717
- Gold down $3 to $1266
- US 10-year yields down 2 bps to 2.88%
- WTI crude down 57-cents to $68.01
- EUR leads, AUD lags
Trade worries hit hard on Monday, particularly in the stock market. The S&P 500 was down by more than 50 points at the lows, or more than 2%. The worries started with WSJ and BBG reports that Trump was considering targeted measures for IP to prevent China from acquiring US technology. At first, futures were taking it in stride but in the hours the followed it got increasingly ugly. First, a tweet from Mnuchin denied the stories. That failed but later Navarro appeared on CNBC to say no investment restrictions against China were forthcoming. That helped to pare the losses and sent USD/JPY quickly to 110.00 from 109.50 but half the pop faded in a slide down to 109.75.
EUR/USD was strong all day in part due to good IFO numbers in Europe. The first push stalled just after 1.1700 then retraced 25 pips. A second wave of buying took it above the figure to 1.1713 at the highs.
Cable was on the march higher from 1.3225 to 1.3290 as New York rolled in but a pair of efforts to break higher couldn't get through, at least so far.
The commodity currencies gave back some of the gains from Friday as AUD/USD slowly slumped down 0.7400 from 0.7420.
All told, the moves in FX and bonds were significantly smaller than FX and that suggests someone is wrong (or late).
