Forex news for US trading on August 11, 2015:
- WTI crude oil settles at the lowest since March 2009
- US Q2 non-farm productivity +1.3% vs +1.6% expected
- Q2 unit labor costs +0.5% vs +0.0% expected
- Canada housing starts July 193.0 k vs 195k exp
- US June wholesale inventories +0.9% vs +0.4% expected
- EIA lowers 2015 US crude estimate by more than $7
- US Redbook retail sales up 1.9% y/y
- US sells 3-year notes at 1.013% vs 1.015% WI
- WTI crude down $1.63 to $43.33
- Gold up $4 to $1108
- S&P 500 down 19 points to 2084
- US 10-year yields down 9 bps to 2.14%
- EUR leads, AUD lags
Oil completely reversed Monday's gain and the Canadian dollar nearly did the same. It was all about the PBOC devaluation move. It left everyone scrambling to a safe haven on talk of FX wars and uncertainty.
The sentiment in markets is that things in China must be much worse than believed if they're going to FX War. I question the wisdom of that analysis but there's no fighting it today.
The big takeaway is that it's bullish for long-dated Treasuries as Chinese money and everything else looks for a safe home with a decent yield. The US flows also so helped the dollar. USD/JPY was particularly impressive as it rose to the highest since June at 125.21 despite a beating in stocks.
EUR/USD wasn't sure which way to go. Bund yields falling and the DAX tumbling were reasons to sell but Treasury yields were falling too and it was a confused mess that led to a rally to 1.1088, above the 55-dma but subsequent selling down to 1.1012 then a late bounce to 1.1043.
The loonie trade was straight-forward. Oil tanked to below $43 from above $45 in a bearish reversal. There was steady buying in USD/CAD from 1.3000 to 1.3140. Watch for the API oil data at the bottom of the hour.
EUR/CHF gained for the seventh straight day and took out 1.0900, running stops to 1.0920. There is no clear catalyst behind the flows but the demand for safety in francs has evaporated in any environment.
