Currencies remain beholden to the goings on in the equity space and the rally in stocks continued to lead the riskier currencies higher. US equities closed up nearly 1% in the face of a weaker than expected housing number as the Fed signaled yet again that it is not ready to withdraw stimulus. The homebuilder sentiment index (NAHB) printed 18 in October while the market had forecast an increase to 20 from 19 the prior month. The homebuyer traffic number sank from 17 to 14 and the weakest read since July â€ looks like that looming expiry of the homebuyer tax credit is starting to bite.
The NY Fed, however, came out and stated that despite looking into the possibility of implementing reverse-repos to withdraw liquidity from the market, this should not be misinterpreted as a sign that the Fed is now ready to tighten policy. Risky assets loved the fact that rates will remain artificially low for the foreseeable future and the US dollar came under pressure as a result.
Commodities ripped to new highs with oil testing just below $80 while gold added a solid $10 towards the $1064 zone as we write. This kept the so-called commodity currencies significantly better bid. AUD/USD printed a session low by 0.9190 before extending towards 0.9290 ahead of the close. USD/CAD collapsed from a high near 1.0400 towards the 1.0280 zone. The strength in the Canadian dollar was also on the back of a much better than expected international capital flow report, which showed an inflow of 5.1 billion â€ consensus looking for 3.0 billion.
EUR/USD printed a new high for the year shortly after earnings for a couple of US tech companies decidedly beat on both the top and bottom line. The market still looks to be gunning for the pivotal 1.5000 mark and we are told that option barriers lurk there and into 1.5050 next. This should make for an exciting overnight session.