Forexlive Americas FX news wrap: White House pivots on proposed tariffs.
Forex news for NA trading on March 7, 2017
- Mixed finish for the major stock indices down and up session
- USDCAD stays below 100 hour MA and trades below trend line
- S&P trades to session highs after the White House tariff pivot
- US consumer credit comes in lower than expected that $13.906B vs $17.650B est.
- There may be tariff exemptions for Mexico and Canada on the basis of National Security (not NAFTA)
- Canada PM Trudeau: Trump very clear that he is focused on moving forward with NAFTA
- Stocks move a little higher after Beige Book
- The summary of the Fed's Beige Book
- Beige Book: Persistent labor market. Price increases in all districts
- Commodity (risk off) currencies go to the edge but don't jump
- Bitcoin trades down over $1200 on the day. Below $10,000.
- European markets ignore US developments and rebound today
- DOE crude oil inventories 2408K vs 3000K estimate
- Trump reported to sign Presidential Proclamation on Thurs. on steel and aluminum
- The Atlanta Fed GDP Now estimate for Q1 growth falls to 2.8% from 3.5%
- Trump Tweet. China has been asked to develop a plan for trade
- Bank of Canada keeps rates unchanged at 1.25% as expected
- Fed's Bostic comments to reporters: Adjusted to 3 hikes from 2 in 2019 now
- UK's Hammond says both sides need to give and take in Brexit talks
- Moody's Analytics Zandi: Jobless rate may fall to 3.0% to 3.5% by summer 2019
- Fed's Dudley: Trade barriers impede focus on comparative advantage
- US Fed's Bostic says proposed trade tariffs would be broadly unhelpful
- Canada Jan international trade balance CAD -1.91bln vs -2.5bln exp
- US trade balance for January -56.6B vs. -$55.0B estimate
- Wilbur Ross: Cohn resignation is not a palace coup
- US ADP Feb employment change 235k vs 200k exp
- The JPY is the strongest while the CAD is the weakest
In other markets as the trading session comes to a close:
- S&P 500 down -1.32 points to 2726
- Gold down -$9 to $1325
- US 10-year yields is down -0.7 bp to 2.879%
- WTI crude oil future are down -$1.27 to $61.33. High reached $62.58 after inventory data but reversed and is ending lower.
Trading in North America got off to a volatile start in the major currency pairs as markets battled with the news of Gary Cohn's resignation from the Council of Economic Advisors, tariff fears and US economic releases.
The negative from the Cohn news was initially balanced by a more favourable ADP employment report in the US. The estimate for private US payroll came at 235K vs 200K estimate. Friday's Non Farm Payroll is expected to come in at 200K. That helped to send pairs like the USDJPY higher on stronger growth.
Later the Trade Balance was not so great with the US posting a wider deficit at -56.6B vs -55.0B estimate. That is not good news for the US economy and the dollar rotated lower.
The Bank of Canada rate decision was up next. They did not surprise the market - choosing to keep rates unchanged at 1.25%.
The focus turned to the stock market and the proposed tariffs and implications of them now that Cohn - a free trade advocate - was to leave the Trump administration.
Cohn's resignation sent stocks lower on the opening, and although the market moved up and down in the US morning, the bias was still largely negative.
In the forex markets, the commodity currencies were the laggards into the London close as "risk off" sentiment was the prevalent bias. The S&P was down about -25 points at the lows, while the Nasdaq fell to a low at -61 points at the lowest point.
Near the London close the commodity/risk off currencies were trading at their lows for the day.
- The USDCAD was up testing the 1.3000 swing high from last week.
- The AUDUSD had moved down to test its 200 hour and 200 day MAs at the 0.7788-92 area,
- The NZDUSD was down testing its 100 and 200 hour MAs at 0.7234-37 (see post here).
You never know what the future might bring, but with key support being tested traders leaned against the levels and stalled the commodity currencies fall with limited risk.
The technical levels ending up holding, and the prices of those commodity currencies reversed a little.
Later in the session, when the White House said that Canada and Mexico (and other countries) might be exempt from the steel and aluminum tariffs, the risk-off trade, turned risk-on, and the losses in the CAD, AUD and NZD were reversed.
Sometimes you get that lucky news in your favour. Those pairs reversed their declines and ended near their highs vs the greenback.
Stocks also recovered. with the Nasdaq closing up about 24 points and the S&P closing near unchanged levels. The Dow could not get back all the declines and ended the session down -83 points on the day.
A look at the winners and losers for the day show that the GBP is the strongest currency of the day and the CHF is the weakest. Although the USD is ending up marginally vs the CAD (+0.19), the AUD (+0.10%) and NZD (+0.07%), the midday snapshot had the greenback besting those currencies by 0.84%, 0.36% and 0.34%. So it was a pretty big reversal in a few short hours.
The USD ended marginally lower vs the EUR, GBP and JPY in an up and down session for those pairs.