The relentless recovery in the greenback remains the primary story driving action in forex and commodity markets. USD has been gaining on all majors overnight as traders continue to speculate that the FOMC is moving toward a more hawkish stance going forward. It has slipped back a bit this morning with traders taking profits against slightly better than expected US jobless claims and durable goods ex transport (and ex the big Boeing distortion) but this appears to be more of a speed bump.
NZD has taken the biggest hit by far, getting crushed again after RBNZ governor Wheeler stepped up his campaign to talk down the dollar, openly threatening to intervene and sell the dollar as he did back in the spring of 2013. Intervention speculation also dragged on AUD as RBA Governor Stevens has threatened to intervene in the past but has yet to pull the trigger. Governor Stevens did, however, indicate he is looking for ways to tighten up lending rules to cool speculation in the housing market.
Continental currencies, CAD, JPY and gold are all falling against USD at about the same pace. GBP is down at a slightly slower pace as it continues to benefit from the post-referendum afterglow and traders turn their speculation back toward when the Bank of England may raise rates as it may also go more hawkish next year. Comments from the Bank of England have been mixed today with Governor Carney suggesting the start to rate normalization may be approaching while Deputy Governor Shafik suggested that both wage growth and productivity gains may play a role in deciding when to start normalizing monetary policy.
Just as the previous day’s selloff was unsustainable, yesterday’s rebound in US indices
has been unable to keep its momentum going either. This action indicates that bulls and bears remain at a standoff with neither side able to maintain dominance for more than a day or so, an environment that favours short-term trading strategies.
In stocks today, trading action in Apple today particularly around the $100.00 level may indicate how worried (or not) traders are about the potential impact the bending phone complaints and rush to fix the iOS 8 operating system problems may have on iPhone6 sales. Blackberry may also remain active between yesterday’s product launch and tomorrow’s earnings report.
Economic reports released overnight and this morning include:
US jobless claims 293K vs street 296K and previous 280K
US durable goods orders (18.2%) vs street (18.0%) vs previous 22.6%
US durables ex transportation 0.7% vs street 0.6% vs previous (0.8%)
Canada average weekly earnings 3.3%, previous revised down to 2.9%
Sweden producer prices 2.7% vs previous 1.4%
Spain producer prices (0.6%) vs previous (0.4%)
Italy retail sales (1.5%) vs previous (2.6%)
Turkey interest rate decision 8.25% no change as expected
Economic reports due later today include:
9:45 am EDT US flash service PMI street 59.2
10:30 am EDT US natural gas street 95 BCF
1:20 pm EDT FOMC member Lockhart speaking