End of Day FOREX Summary

After opening the Asian session with more USD dollar gains, the greenback gave up those overnight gains and found itself down .25%. The risk-on game seemed to be open for business at least for half the day. A big late reversal in the SNP confirmed that it would be a long week ahead.

INTERMARKET ANALYSIS: The US equity markets seemed to be relatively flat starting out and shrugged off worse than expected economic numbers from this morning.

USDMonday, May 16, 20118:30AM ESTTIC LONG-TERM PURCHASES24.0B57.7B27.2B

However, that would not last long. Everything seemed to change around lunchtime, 12:45PM EST. SPX ended the day down 8pts (-.62%). Commodities saw silver down 4% to 33.56, gold flat, and oil down 2.5pts (-2.6%).


EURUSD @ 1.4160:

Markets have withstood Saturday night's arrest of the head of the International Monetary Fund, Dominique Strauss-Kahn's, pending allegations that he sexually assaulted a housekeeping employee at the Sofitel Hotel in Manhattan. The EURUSD was up 140 pips earlier in the day and ended up 60 pips in the money. Technically speaking, EURUSD has hit the weekly pivot point of 1.4208 and is ready to sell off with the rest of the market.

USDJPY @ 80.78:

It's been a relatively flat day for USDJPY. After reaching a high of 85.51 on 4/6, post G7 coordination, the pair has fallen 21 out of 28 days. Look out for comments by the BOJ for more intervention conversations on May 19th during their monetary policy meeting.

USDCAD @ .9755:

CADMonday, May 16, 20118:30AM ESTMANUFACTURING SALES M/M1.9%1.6%-1.5%

Canadian manufacturing sales came out better than expected this morning, however traders dismissed them for the overall market risk aversion trend. Bank of Canada (BOC) Governor Mark Carney spoke earlier with the following remarks:

  • Inflation to remain above 3 percent in short term, due to sharp rise in energy prices and tax changes
  • Excess FX, financial volatility if investors shift capital into emerging market proxies like Canada
  • Global demand for commodities to remain robust for some time
  • Large sustained increase in demand, notably in China, is primary driver of commodity boom
  • Not expecting IMF troubles to impact global economy
  • No reason to impose capital controls but vigilant on inflows

It's interesting to note that Carney said on Friday May 13th that a robust Canadian dollar has sapped a lot of the country's manufacturing competitiveness by raising costs of its exports in foreign markets. I wonder if next month's manufacturing sales numbers will reflect Carney's concern.

AUDUSD @ 1.0560:

Australia started Sunday night with home loan numbers which were worse than expected but better than previous.

AUDSunday, May 15, 20119:30PM ESTHOME LOANS M/M-0.0152.3%-4.7%

There was a slight move up but hardly anything significant. Today, AUDUSD followed risk, where it was up over 70 pips during the early afternoon before retreating to a flat day. Overnight we have RBA minutes at 9:30EST which will undoubtedly move the currency.

USDCHF @ .8845:

Swiss saw the largest movement today as risk aversion picked up right where it left off from last week. During risk aversion, we see dollar gains except against Japanese YEN and the Swiss Franc. The pair ended down 79 pips on the day.

NZDUSD @ .7805

Traders finally woke up and remembered that the central bank cut interest rates following the worst earthquake in kiwi's history. There was no reason for this currency pair to be up close to 81 cents just earlier this month. With risk aversion to continue for the rest of the week, look for NZDUSD to lose more ground than any other major currency pair.


Carry traded currencies were a mixed bunch today, where GBPJPY and AUDJPY were flat, biggest move was seen in CHFJPY up 90 pips, and down close to -1% in NZDJPY and CADJPY. See below for a breakdown in other cross currency pairs.