Forex headlines for January 28, 2013:
- US Dec durable goods orders -4.3% vs +1.8% expected
- S&P/Case-Shiller house price index +13.71% y/y vs +13.8% y/y expected
- Richmond Fed manufacturing index +12 vs +13 expected
- US January consumer confidence 80.7 vs 78.0 expected
- State street global investor confidence index 114.4 vs 95.9 prior
- January US Dallas Fed services index 16.8 vs 12.5 prior
- Spain’s De Guindos extremely confident Spanish banks will pass AQR
- ECB sources at MNI say central bank content with present stance
- S&P lowers Ukraine’s rating
- S&P 500 up 11 points to 1793
- Gold down $3 to $1254
- WTI crude up $1.53 to $97.25
- NZD leads, CAD lags
The durable goods orders report led to a swift, but surprisingly modest round of US dollar selling. It’s tough to blame this one on weather but some economists still pointed to seasonals saying that the timing of Thanksgiving could have skewed seasonal adjustements.
USD/JPY initially fell to 102.63 from 103.10 but it rebounded from there. Importantly, however, it wasn’t able to re-take 103.00. USD/JPY was unable to close above the 55-day moving average at 103.15 so that’s also a level to watch.
EUR/USD sprung higher on the durables data, retracing almost the entire decline in Europe, touching 1.3687 at the high. From there, the euro was heavy despite some chatter of the ECB remaining on the sidelines next week. Asian accounts in NY were said to be sellers ahead of 1.37.
Cable fell to 1.6536 in Europe from a high of 1.6625 following the GDP report. The pair has tested both sides of that range in New York but hasn’t come close. Technically, it’s wedging so we’ll wait for the next move before drawing conclusions. If the economy isn’t quite so strong and Carney wants to stay on the sidelines, the case for cable longs isn’t so great, especially with tapering on tap.
One trade that continues to make a strong case is bets against the Canadian dollar. The loonie was sold throughout North American trading and touched a fresh cycle high at 1.1177, albeit briefly, before settling back to 1.1154. In almost any environment, the Canadian dollar has proven it can sell off and now that a bounce has diminished overbought USD/CAD conditions, the coast is clear.
