- ISM February services index 52.6 vs 53.0 expected
- US February final S&P Global services PMI 52.3 vs 51.3 prelim
- US factory orders for January -3.6% versus -2.9% expected
- What's priced in for the Bank of Canada ahead of Wednesday's decision
- New Zealand GDT price index -2.3%
Markets:
- Gold up $13 to $2128
- Bitcoin down 5.5% to $63,854
- US 10-year yields down 7.8 bps to 4.14%
- S&P 500 down 1.0%
- JPY leads, CAD lags
The early indications that it was going to be a rough ride today came from the bond market, where Treasury yields began to tick lower. Stock markets and yen crosses followed, though the price action in FX was somewhat disappointing.
The dollar selling accelerated after the soft ISM data, which was complete with lower employment and price paid metrics in an early sign the US economy could be softening. Fed funds futures priced in slightly more cuts and there was some initial buying in equities. That move also led to a record in bitcoin, above $69,000. However there were many bitcoin bulls looking to sell the ATH and it was crunched down below $60,000 over the next few hours before bouncing to $63,500 late.
Gold also hit an all-time high earlier in the day at $2140 and also backed off but only slightly and it still finished the day higher.
USD/JPY was caught in the dollar selling and risk aversion but those two could only combine for a 50-pip drop, though it was briefly more than that as stops were run below 150.00.
The euro hit highs at 1.0876 after ISM and cable reached 1.2734 but both gave back around 30 pips afterwards as the risk picture dimmed.
Surprisingly, the commodity currencies held up despite the mood and a lack of enthusiasm about Chinese stimulus announcements so far. Beijing did touch on year-long stimulus for consumers but the market is waiting to hear the details.
