Article / 16 August 2016 at 23:38 GMT

US Market Wrap: Nouveau Fed hawk Dudley dines on doves

FX Consultant / IFXA Ltd


  • Nothing of note 

US Data released:

  • Housing Starts -July (Actual 1.21 million vs. forecast 1.80 million, m/m) 
  • Building Permits -Jul (Actual 1.15 million vs. forecast 1.16 million) 
  • CPI -July (0.0% vs. forecast 0.0%) 
  • CPI ex- food and energy (Actual 0.1% vs. forecast 0.2%) 
  • Industrial Production-Jul (Actual 0.7% vs. forecast 0.3%) 
  • Capacity Utilization-July (Actual 75.9% vs. forecast 75.6%)
  • API Crude Stocks Change (Actual -1.0 m/b vs. previous week 2.09 m/b)

A barrage of US economic data releases and a comments from New York Federal Reserve President William Dudley sent the US dollar on a wild ride.

Just as traders were trying to decipher the CPI, Housing Starts and Building Permits data, comments from Dudley scrolled across screens.

The noted dove gave his best hawk imitation and declared that “its possible” to hike rates in September.

Yesterday, fellow board member, San Francisco Fed President John Williams, implied lower rates for longer when he talked of raising the Inflation target. That is “forward guidance”, in Janet Yellen’s Fed-speak.

EURUSD spiked to 1.1320 from 1.1280 and then dropped to 1.1244 while USDJPY hit 99.55 and then bounced to 100.50.

By the time New Yorkers headed for the exit’s Aussie, Kiwi and Yen were the losers for the session and those losses were small.

Oil prices continued to climb. WTI started the day at $45.85/barrel, dipped to $45.55/b and then rallied to $46.70/b, just before the close.

API weekly crude stocks change showed a decline of 1 million barrels but a 2.2 million barrel rise in gasoline inventories pushed WTI down to $46.07/b before bouncing to $46.37/b in after-hours trading.

The mixed US data and Dudley’s comments were all US equity traders needed to unload some positions. US equity indices closed down for the day.

 Playing it tough: Fed dove William Dudley says there could be a hike next month. Photo: iStock


"Global asset markets are in a summer of love" writes Saxo Bank's Head of FX Strategy, John Hardy in: Markets getting increasingly bubbly — will central bankers blink?

"the importance of the (retrospective) August FOMC minutes has been gazumped" writes TradingFloor contributor, Neil Staines in: Fed indecision to raise sunken cable?

-- Edited by Adam Courtenay

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