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Forex headlines for October 17, 2013:
• S&P 500 hits all-time high
• October Philly Fed 19.8 vs 15.0 expected
• Fed’s Fisher says debt crisis deal does not solve fiscal problems
• Fed: Evans expects tapering to be postponed due to shutdown
• Fed: Kocherlakota says more stimulus might be needed to cut jobless rate
• The Fed’s George will wants taper
• Mario Monti resigns as leader of his party over 2014 budget
• US initial jobless claims 358k vs 335k exp
• US government shutdown will shave 0.3 percentage points from Q4 GDP — Reuters poll
• Obama: The American people are completely fed up with Washington
• Gold gains $36 to $1319
• WTI crude down $1.71 to $100.58
• 10-year T-notes down 7 bps to 2.59%
• GBP leads, USD lags
Economic news had almost no effect on the market today. The Philly Fed was upbeat but the market was turning around anyway, jobless claims are totally disregarded because of computer problems in California. Technical momentum carried the S&P 500 to a record high with most of the gains late in the day. Despite the move, FX was sidelined and USD/JPY traded in a 30-pip range in US hours.
Cable ripped higher in Europe but stalled after a couple hours of US trading. Offers at 1.6180 with more behind at 1.6200 capped the rip-roaring 200-pip rally today. It’s gone dead for now but the lack of any kind of retracement should be encouraging for the bulls.
Similar story elsewhere as the US dollar sank but has hardly been able to muster a dead cat bounce. EUR/USD cruided to 1.3682 and is just a few pips away from the high. The low in US trading was 1.3656.
AUD/USD continues to ride high on the risk trade. It hit 0.9647 in a more-or-less straight line but has scaled back to 0.9631 despite the strong close in stocks.
Oil was a laggard today, despite the crummy dollar. Oil touched $100.07 from close to $102 at the start of US trading.
Overall it was a big day for the dollar bears but at some point the divergence between stocks and bonds will need to sort itself out. The market is excited about no taper for the moment but earnings and economic data will need to confirm the story.