10 October 2017 at 21:41 GMT
- Japan Machinery Orders-August (Forecast 1.1% vs July 8.0%)
US Data released
The US and Canada returned from a long weekend to find the US dollar a tad worse for wear. The greenback opened with losses across the board, except against the Swiss franc and the New Zealand dollar. USDCHF was undermined by Spanish political concerns, while NZDUSD was weighed down by the unsettled election outcome in New Zealand.
The US dollar closed in New York relatively flat compared to its opening levels but the period in-between was rather frothy. The President of the Catalan area of Spain, Carles Puigdemont, opted for negotiation rather than a unilateral declaration of independence, removing a major FX concern, at least for the time being.
EURUSD opened with a bid and climbed steadily, rising from 1.1774 to 1.1824 when the Catalan President took a more conciliatory approach to separation talks.
USDJPY bounced in a tight range until mid-morning when prices broke below minor support at ¥112.30 and dropped to ¥112.04, coinciding with a drop in Treasury yields. North Korea concerns and the lead up to the Catalan President’s speech also weighed on the currency pair.
Sterling managed to hang on to earlier gains and finished the day at 1.3206. GBPUSD continued to be supported by news on Monday that the Office of National Statistics made an error in its original calculations for growth in unit labour costs. The actual number was 2.4%, not 1.6%. The revised data bolstered the case for a rate hike by the Bank of England.
AUDUSD and NZDUSD were very choppy inside 0.0030 point ranges. USDCAD dropped during the early morning and then reversed the move in the afternoon, ignoring rapidly rising oil prices.
WTI oil opened at $50.03/barrel and climbed rapidly to $51.02/b just after lunch. The rally was sparked by a comment from the Opec Secretary-General Mohammed Sanusi Barkindo that there was “direct evidence” the oil market was rebalancing.
Wall Street rallied, making new record highs in the process. Wal-Mart (WMT: NYSE) rose 4.47% after the company announced plans for a $20.0 billion stock buyback.
Opec Secretary-General Mohammed Sanusi Barkindo, above, sparked a rally when he said that there was “direct evidence” the oil market was rebalancing. Photo: Shutterstock
– Edited by Robert Ryan
Michael O'Neill is an FX consultant, currency strategist and author of the Trade of the Day at Loonieviews.net. Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.