Risk appetite came off the boil in NY trading and the US dollar was promptly better bid. US economic data provided the catalyst as October consumer confidence disappointed in a big way. The headline index sank to 47.7 from 53.4 and given that the market was looking for an increase, the surprise was palpable.
The guts of the report were ominous as the present situation component fell to a new cycle low 20.7, taking out the 21.9 March low in the process. So consumers are actually less confident about their current situation now than they were at the equity market bottom!
If that wasn't enough to send the bulls into hiding, the labor differential (jobs plentiful minus jobs hard to get) dropped to a new cycle low of -46.2 from -43.4 the prior month. This suggests we could be in store for a 10% print in the unemployment rate as early as the next NFP release (due up next week).
Equities dropped another -1.2% on top of yesterday's steep losses. EUR/USD has been one of the more closely correlated currencies with stocks and the pair took a big hit on the back of the flight to safety trade. It is sitting by 1.4800 as we write, after an open near the 1.4875 zone and a London high above 1.49 to boot.
The so-called commodity currencies traded in choppy fashion as both oil and gold ended the session about flat. USD/CAD slipped from a 1.0700/10 high back towards the 1.0650 area despite jawboning from Canadian exporters that CAD strength will decimate their business and the economy.
AUD/USD, meanwhile, ranged between 0.9190/0.9120 and continues to consolidate ahead of the 830pm ET Australian CPI report. A firmer than the expected 0.9% increase for 3Q could fuel speculation that perhaps the RBA will hike rates by 50 basis points at the next confab and thus drive AUD higher here.