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Article / 29 September 2016 at 22:16 GMT

US Market Wrap: A whiff of risk aversion in the air

FX Consultant / IFXA Ltd
Canada
saxo
 
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Watchlist:

  • Japan: CPI, Employment, Household Spending: 1930 GMT 
  • Japan: Industrial Production-August: 1950 GMT 

US Data released:

  • Annualised Q2 GDP (Actual 1.4% vs. forecast 1.3%) 
  • Initial jobless claims (Actual 254,000 vs. forecast 260,000) 
  • PCE, Q1 (Actual 2.0% vs, forecast 2.0%, Core 1.8% vs. forecast 1.8%, q/q) 
  • Pending Home Sales for August (Actual 2.4% vs. forecast 0.0%) 

Forex markets have the attention span of a gnat. Yesterday’s Opec story and the ensuing hoopla gave way to bank concerns. That led to a bit of risk aversion trading with both the Swiss franc and the Japanese yen posting gains. EURUSD was flat. Furthermore, most of today’s US data came in on the strong side, providing additional support to the December rate hike camp.

The rally in crude oil prices didn’t appear to provide any support for the Canadian dollar or the Antipodeans, for that matter. All three currencies the Canadian, Australian and New Zealand dollars – finished down on the day.

Oil prices continued to climb higher on the production cap news. The break above $47.50/barrel may have triggered stop losses as short positions got squeezed. WTI traded in a $46.65/b to $48.27/b range and drifted lower into the close.

US equity indices took a hit when Bloomberg ran a story about fears that banking woes could spread. Too big to fail? Harrumph! The major indices were down around 1.0%.

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 Crude prices made gains on news that the 14 members of Opec have made a preliminary agreement to place a cap on output. Photo: iStock

Opinion:

Bond markets may become the dominate driver in FX markets, writes TradingFloor contributor, Neil Staines in: Scattered markets can't find focus

For more on forex, click here.

– Edited by Robert Ryan

Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to
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