Forex headlines for January 6, 2014:
- ISM non-manufacturing index 53.0 vs 54.6 exp
- New orders component lowest since 2009
- US Dec factory orders +1.8% vs 1.7% exp
- Nov nondefense capital goods orders ex-air revised to 4.1% from 4.5%
- December 2013 US Markit services PMI final 55.7 vs 56.0 prior
- Gold drops $30 in seconds, recovers to close flat on day at $1237
- Canada industrial product price +0.1% vs -0.2% exp
- Oil closes at 5-week low, down 32-cents to $93.64
- OPEC output falls to lowest since May 2011 – Reuters survey
- Lautenschlaeger’s ECB appointment to be fast-tracked
- S&P 500 down 5 points to 1827
- JPY leads, CAD lags
Yen crosses slumped after a disappointing ISM non-manufacturing report led to a round of risk aversion. USD/JPY fell to the lows of the year, slightly below 104 after storming to 104.85 in early US trading. Stocks rebounded to unchanged late in US trading and that prompted a bounce to 104.34 but the positive signs from Friday in the technical picture for the yen crosses have been badly damaged. Last at 104.19.
The two JPY crosses that were able to hold the overnight lows were EUR/JPY and GBP/JPY — the co-generals of the war against JPY. GBP/JPY barely held the 170.40 low while EUR/JPY had some breathing room ahead of 141.51. Those will be the key levels in the day ahead with Nikkei futures pointing to another selloff.
The euro was resilient against the dollar. After a slump to 1.3570 in Asia, EUR/USD rebounded and retook the 55-dma and continued to 1.3653 — hitting a session high near the end of US trading. Cable was similarly buoyant after a dip on the soft services PMI. GBP/USD last at 1.6403 after falling as low as 1.6339.
The Canadian dollar found some love in the first hours of trading on comments from Flaherty about a larger surplus but there was no liking CAD once local traders rolled in. USD/CAD touched as high as 1.0680 — the highest since Dec 29. The larger range of 1.0550-1.0750 remains the overarching theme in the pair but soft global macroeconomic data threatens to undermine the commodity bloc.