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Article / 26 September 2016 at 22:30 GMT

US Market Wrap: No debate about it – USD drops

FX Consultant / IFXA Ltd
Canada
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Watchlist:

  • Japan: Bank of Japan monetary policy meeting minutes 2350 GMT 

US Data released:

  • New Home Sales change August (Actual -7.6% vs. forecast -8.6%, m/m) 

The debate started early today. No, not the Clinton/Trump chin-wag but the debate on the direction of the US dollar for the day. The bears won.

EURUSD edged higher, perhaps supported modestly by Mario Draghi’s comments that lower interest rates are a symptom of slow growth, European Central Bank member Benoît Coeuré supported the view when he said that negative interest rates are not the most important tool for the central bank.  

USDJPY declined steadily throughout the day while GBPUSD bounced from the overnight low. The Canadian dollar was the only currency to lose ground to the US dollar despite a rebound in oil prices, on a continuation of the Friday move and in part because some believe that the Bank of Canada could cut rates. There is also an element of fear of a Trump victory resulting in the loss of Nafta undermining the Loonie.

Oil prices climbed steadily until mid-afternoon when profit-taking took WTI crude down from $46.15 to $45.52. The Algiers meeting is still going strong and there were not any fresh sound bites.

US equity markets sold off in part because of contagion from the plunging Deutsche Bank shares in Europe. The Trump/Clinton debate was anther excuse to take profits.

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The Trump/Clinton debate was anther excuse to take profits in US equity markets. Photo: iStock


Opinion

Saxo Bank's Product Manager for Futures and Options, Georgio Stoev, suggests a put strategy to hedge an equity portfolio in: Volatility Update: Vix back in the grind



– Edited by Susan McDonald


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