For the first time in about five months, the US dollar is under considerable selling pressure. Yesterday’s surprisingly dovish FOMC minutes have badly hurt the greenback as an overbought market has seemingly finally turned. Economic data was once again limited through the Asian and European sessions as the Bank of England left interest rates unchanged at 0.50% for the 67th straight month. Global equities are mixed following the biggest advance by US equities in three years after Ms. Yellen and company left the door open on stimulus and tempered expectations of rising interest rates.
A number of FOMC members said U.S. growth “might be slower than they expected if foreign economic growth came in weaker than expected” as interest rates could remain near zero for a “considerable time”. European growth has really come under the microscope over the last month as German data, once holding the torch for the continent, has begun to wane. European equities are down about 7% across the board and it is the uncertainty that is leaking into the minds of policy makers on this side of the Atlantic, worried that it may spiral into the US. The S&P 500 had a 44 point turnaround from Wednesday’s losses as US equities soared on renewed expectations that easy policy may be here a touch longer.
The Aussie dollar stalled at .8900 after the country lost 29.7k jobs in September, a 20k increase had been expected. Asian equities were all higher on the FOMC minutes as nearly all currencies rose at the dollar’s expense. The JPY continued its rise as USDJPY comfortably moved below the 108 handle for the second time this week. Aided by stronger core machinery orders for the month of August, the Japanese yen, like the dollar, is experienced an overdue bounce. Into European trading, the euro shrugged off another bad bit of German data. This time, it was a 5.8% fall in August exports for Europe’s largest economy, but the euro chugged on as it is now more than 2% off the most recent lows.
Turning to North America, American weekly jobless claims and Canadian Home Prices carried the torch to begin the session. Jobless claims were 287k and Canadian home prices were +1.5% as both countries equity futures lie slightly positive in pre-trading. There is some clear decoupling going on at the moment across the global market spectrum. WTI oil prices dipped below technically important levels at $88 per barrel and continue to slide lower despite the dollar sell-off. Commodity currencies like the AUD, NZD and CAD inch higher today tracking gold and silver, which have rebounded sharply over the past twenty four hours. The Canadian dollar has lagged this move a bit, possible benefiting from its proximity to the US, some make-up could be in store today as the Loonie slides lower below 1.1100.
Further reading:
Wave-C Set To Unfold in GBP/USD; Levels & Targets – Nomura
US jobless claims at 287K, moving average at 8 year low – USD slightly recovers
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