Forex news for Americas trading on August 29, 2019:
- US Q2 GDP second reading +2.0% vs +2.0% expected
- Germany August preliminary CPI -0.2% vs -0.1% m/m expected
- US July advance goods trade balance -$72.3B vs -$74.4B expected
- US wholesale inventories for July 0.2% vs 0.2% estimate
- US initial jobless claims 215K vs 214K estimate
- Nikkei Asian Review: China clamps down on capital flight risk as yuan weakens
- US treasury sells $32 billion of 7-year notes at a high yield of 1.489% (big tail)
- NHC says Hurricane Dorian to become Category 4 storm in next 72 hours
- ECB's Knot says there is no need to resume QE program
- US July pending home sales -2.5% vs 0.0% m/m expected
- IMF gives China cover to weaken the yuan further
- Hungary's forint falls to all-time low against the euro
- Canada Q2 current account balance -$6.38B vs -$9.75B expected
Markets:
- S&P 500 up 36 points to 2924
- WTI crude oil up 77-cents to $56.55
- US 10-year yields up 14.5 bps to 1.49%
- Gold down $11 to $1527
- CAD leads, CHF lags
More talk of US-China meetings and phone calls continued to pump up US equity markets on Thursday in an impressive rally. I continue to believe month-end rebalancing is a factor but there is clearly some optimism on US-China trade. At least there is in stock markets because bond yields could rise even after a 2 bps tail in the 7 year auction.
The dollar was strong throughout the session and steadily climbed to 106.50 from 105.90 against the yen.
The euro also felt some pressure against the dollar. The big headline of the day for euro traders was from Knot who was surprisingly hawkish. That sent the euro to the highs of the day at 1.1093 but it was slammed back down to 1.1042 in a curious move that suggests that the market is more-concerned about growth or believes it was a bluff. Mix in some month-end flows there as well.
Cable was heavy as Labour tries to circle the wagons to pass legislation to halt a no-deal Brexit and prevent Johnson from proroguing parliament. The market is acting like it's a longshot and we will find out on Tuesday.
The commodity currencies didn't get any help from better risk trades and a rise raw materials prices and the bid in the dollar swamped any optimism.
