Forex news for US trading on October 7, 2016
- US stocks end the week with modest losses
- Late day fall in the US dollar
- CFTC commitment of traders: GBP shorts increased by 10K in the week
- Fed's George: The jobs report was encouraging
- US consumer credit rises by $25.873B vs 16.5B estimate
- US crude oil futures settle at $49.81 per barrel
- The top 5 events and releases for the week starting October 10th
- ECB Draghi: Rates would stay low until growth picked up
- Fed's Mester: Q&A after her speech in NY
- Baker Hughes oil rig counts 428 versus 425 last week
- Fed's Mester says Fed communication needs improving
- USDCAD trades at highest high since mid-March
- UK's Hammond: Won't definitely take fiscal action in Nov
- Nothing can save the Canadian dollar
- A risk weekend ahead is worth taking note of
- US GDP forecast cut by the Atlanta Fed
- ECB's Stournaras says UK will suffer the most from Brexit
- Fed's Fischer: Job report close to a Goldilocks number
- Carney has asked the markets committee to look into GBP flash crash
- September 2016 UK NIESR GDP forecast 0.4% vs 0.3% prior
- The September Ivey PMI (SA) comes in at 58.4 vs. 53.1 estimate
- August 2016 US wholesale inventories final -0.2% vs -0.1% exp m/m
- Was that a make or break jobs report for the Fed and a Dec hike?
- Fed's Mester: That was a solid labour market report
- September 2016 US non farm payrolls 156k vs 175k exp
- Canada September employment +67.2K vs +7.5K expected
It is not often that the US employment report is overshadowed by anything. However, a flash crash - led by the GBPUSD - was the story of the day. That pair fell as low as 1.1491 according to Thomson Reuters at it's lowest of low levels. Yesterday, the GBPUSD closed at 1.26129. That is a decline of 1122 pips. On a 1 lot position of $100,000, that equals a change of $11,210. The move down took less than 5 minutes. The snap back rally to the corrective peak at the 1.2480 level (or 991 pips) took 75 minutes to complete. What is 991 pips worth in dollar terms? $9,910 per lot. That is a lot a volatility in a little over an hour.
Since reaching the peak, the trading range was more confined. The high was at 1.2480. the low extended to 1.2225 or 255 pips. For the NY session, the range was even more confined at 159 pips (from 1.2310 to 1.2469). That included the US employment report. So volatility was more controlled. Was the sell off too much? Going down to 1.1491 may have been - after all, the pair is closing near 1.2431 nearly 1000 pips off the low. However, the market STILL got a heavy dose of selling in the GBPUSD this week (down >550 pips/4.13%) and that will be hard to shake going forward. At the very least, there will be fewer traders looking to pick a bottom. That should continue to limit the rallies.
Speaking of the US employment report, it showed that 156K new jobs were created, a revision of -7K to the prior two months. Manufacturing jobs continue to be a negative with -13K jobs lost (prior month was revised to -16K from -14K). The Unemployment rate ticked up to 5.0% from 4.9% and average hourly earnings came in at +0.2% vs +0.3% estimates. The tick up in the unemployment rate was because the participation rate increased to 62.9% from 62.8%. What does the Fed think? Fed's Mester called it solid, but she is a hawk. Fed's Fischer said it was a Goldilocks report - not too hot, not to cold. He did not vote to tighten at the last meeting but at Jackson Hole a month or so ago said the Fed could tighten twice before year end. I am sure he probably does not think that, but is one doable? The market puts the odds of a December hike at about 64%(Fed Funds futures). Yellen speaks next Friday. The market will be waiting to hear what she has to say given the data (by that time Retail sales and PPI will also be out).
The USDJPY fell on the weaker data. That fall took the price below the 100 day MA at 103.60. IN the NY afternoon session there was a modest attempt to get back to the MA level, but the price fell short (the high reached 103.46 before reversing and closing below 103.00 at 102.87. IN a week that saw the price climb above the 100 day MA for the 1st time since February 2016, it ended with a big thud.
THe EURUSD is closing above the 100 and 200 day MA after an up and down trading week. Those moving averages come in at 1.11656 and 1.1179 respectively. They will once again be in play in next weeks trading.
The CAD ended the day weaker and for the week was 1.17% weaker vs the USD. This despite oil prices moving back above the $50 level (admittedly it did close below the $50 at $49.81 but it was still a nice week up for the black gold) and an employment report from Canada that saw the net change in employment surge by 67.2K jobs (est. +7.5K). HMMMM It is hard to get the CAD up. The pair closed above the 200 day MA at 1.3209 (closing level was 1.3293). Yesterday it also closed above the key MA as well. We have not seen that happen since March.
The AUDUSD and the NZDUSD had an up and down trading day and closed near the middle of the days range. For the week,however, the dollar gained against each.
In fact for the week - despite the weakness today - the dollar rose against all the major currencies (sans the Chinese Renminbi). It was the king of the hill. What will next week bring with the weaker ending?
Have a great weekend to all.
For those followers in Florida, Georgia and South Carolina, thoughts and prayers to you and yours. I have family and friends who are there and can only hope that they remain safe from harms way, and that the property damage is minimal.....
