Wednesday, October 8, 2014

USD continues to fall vs G10, most (but not all) EM currencies

•     USD continues to fall vs G10, most (but not all) EM currencies
–    EUR/USD gains modestly even though German industrial production plunges; indicates general USD-negative sentiment
–    US job openings at a 13-year high fails to support USD as quits & hirings still weak, meaning little pressure on wages
•     Market is discounting lower global growth
–    Oil and copper prices down sharply even though USD was lower
–    US bond yields down, Fed funds futures implied rates off sharply, stocks fall
–    Lower growth should be negative for commodity currencies (AUD, NZD, CAD)
•     CAD falls after building permits plunged in August
–    Likely to be a focus today as housing starts are coming out (see below)
•     Today:
–    US: Minutes of the Sep 16-17 FOMC meeting. Market will be looking for some explanation of why they kept the “considerable time” statement even though they raised their forecasts for Fed funds rate

–    Canada: Housing starts for Sep expected to rise, but disappointment is possible following the shocking drop in building permits in August

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