Forex news for North American trade on August 1, 2018:
- Federal Reserve leaves rates unchanged, as expected
- The full text of the August 2018 FOMC statement
- Trump to propose 25% tariffs on $200 billion of Chinese goods today - report
- US July final Markit manufacturing PMI 55.3 vs 55.5 expected
- US July ADP employment change +219K vs +186K expected
- US July ISM manufacturing index 58.1 vs 59.4 expected
- US July total vehicle sales at 16.77m rate vs 17.24m in June
- NAFTA: US, Canada and Mexico 'very close' on auto rules of origin - Canadian official
- NAFTA: Mexican official says "getting close" on autos deal
- US construction spending for June -1.1% vs 0.3% expected
- Canada July Markit manufacturing PMI vs 57.1 prior
Markets:
- Gold down $8 to $1216
- WTI crude oil down $0.92 to $67.84
- US 10-year yields up 4 bps to 2.99%
- S&P 500 down 3 points to 2813
- JPY leads, NZD lags
The market was locked in anticipation of the Fed decision all day but there was a collective feeling of "that's it?" after the release didn't provide anything new beyond endorsements of stronger growth and household spending.
What complicated the market's response to the Fed decision was that confirmation of Trump proposing raising tariffs to 25% from 10% hit just as the statement crossed. It's debatable which one caused the dollar selling but either way, the moves were negligible in the bigger picture because after USD/JPY fell to 111.40 from 111.67, it rebounded.
EUR/USD was chopping lower all day in a slide as low as 1.1657 to finish down 30 pips on the day.
Cable is the big focus in the day ahead with the BOE to come. Naturally, trade was limited ahead of the big event and the pair chopped around 1.3125.
USD/CAD was an interesting case because the US and Mexico are making progress on the autos section of NAFTA, while leaving Canada out. The worry is that they gang up on Canada somehow and leave Ottawa with a worse deal. Oil is also part of the equation as it slips. In any case, the bulk of the market appears to be slowly coming to the conclusion that a deal is getting closer and USD/CAD finished the day at 1.3000 in a small drop.
