Forex news for North American trade on January 3, 2019:
- December ISM manufacturing index 54.1 vs 57.5 expected
- US initial jobless claims to 231K vs 220K estimate
- US ADP employment change for December 271K vs 180K est.
- Pelosi wins vote for House speaker
- Bank of Japan policymakers will weigh downgrading their inflation outlook - report
- Chatter that May expects to lose the Brexit vote, but the market doesn't care
- Atlanta Fed GDPNow estimate for fourth-quarter growth cut to 2.6% from 2.7% last
- White House's Hassett predicts 'heck of a lot' of US companies to follow Apple
- Fed's Kaplan: Question of rate cut has not entered my mind
- US December Challenger job cuts +35.3% vs +51.5% y/y prior
Markets:
- Gold up $9 to $1294 -- a six month high
- WTI crude oil up 29-cents to $46.83
- S&P 500 down 62 points to 2447
- US 10-year yields down 6.7 bps to 2.55%
- JPY leads, USD lags
The yen flash crash was the story 24 hours ago but those moves were mostly wiped out. In fact, if you look at the drop in stock markets you could make the argument that the declines in yen crosses were less than you would normally expect on the day as a whole, which is truly amazing.
The theme in North American trade was US dollar selling after the ISM manufacturing index. It confirmed some weak regional numbers in the largest one-month fall since 2008. The new orders metric plunged to just above 50 in a sign that the trade war is hitting hard.
In a bizarre comment, the White House's Hassertt said more companies are going to follow Apple and warn on profits due to China.
The combination started a conversation about the Fed cutting rates late in 2019 and the dollar began to sank alongside Treasury yields. USD/CAD in particular was hard hit as it fell below 1.35 from 1.3625 at the start of the session. The other commodity currencies were also strong.
Cable completely erased its earlier fall to finish up on the day in a dramatic reversal. There's talk that May's vote is doomed but that's a trade for another day. Last at 1.2628.
EUR/USD climbed back above 1.1400 but had a hard time pushing beyond that.
USD/JPY bounced around the 107.00-108.50 range in volatile trade but finished the session about where it started at 107.65 as risk aversion and dollar selling weighed.
