Forex news for July 7, 2016:
- FOMC Minutes: Almost all Fed officials saw payrolls raising uncertainty
- French GDP surpasses Britain on plunging pound
- Atlanta Fed GDPNow 2.4% vs 2.6% prior
- ECB's Nouy: We will be significantly increasing the data we make available to the public
- June ISM non-manufacturing expected 56.5 vs 53.3 expected
- Markit June final US services PMI 51.4 vs 51.3 exp
- Fed's Tarullo Q&A: Liquidity isn't where it should be for financial firms
- Tarullo: Fed will 'watch and see' over medium term after Brexit vote
- US May trade deficit $41.1 billion vs $40 billion expected
- Canada May international merchandise trade balance -3.28$B vs -$2.70B exp
- French PM Valls is pulling out all the stops to suck business from Britain
Markets:
- Gold up $7.50 to $1363
- WTI crude up $0.77 to $47.38
- S&P 500 up 11 points to 2099
- US 10-year yields flat at 1.37% after hitting record low 1.31%
- AUD leads, GBP lags
The ISM non-manufacturing at first looked like it would extend a trend of US dollar strength against GBP, EUR and the commodity currencies but after a quick dollar move, markets began to reverse and that was the theme for the rest of the day.
The FOMC Minutes were largely a non-factor. They confirmed the Fed had already moved into a nearly-neutral stance before the Brexit vote.
EUR/USD fell as low as 1.0229 after the ISM data then slowly rallied to 1.1100 afterwards.
USD/JPY reflected the turnaround in bond yields (which bounced from record lows) and stocks, which opened lower but finished solidly higher. It was a steady 65 pip rally in the pair.
The market is struggling to grasp a theme following the Brexit vote. Cable remains on the backfoot and bonds are bid on central bank dovishness but otherwise there is a restlessness and uncertainty that leaves other trades vulnerable to reversals.
Oil today fell to $45.80 for the third time in the past month but later turned around and has rallied to $47.91, in part due to strong API inventory data released late in the day. USD/CAD followed the same pattern as a rally to 1.3056 was sold 100 pips lower.
Cable was quieter today as it consolidates below 1.30. A small wedge has formed in the short term as we sort out the economic impacts and what the BOE will do next.
