ForexLive Asia FX news: Why yes, the USD does seem to have got THE memo

Author: Eamonn Sheridan | Category: News

Forex news for Asia trading Wednesday 17 May 2017

USD/JPY

There was one big news story driving markets in Asia today, the NYT piece on the "Comey memo" - in brief:

Mr. Comey wrote the memo detailing his conversation with the president immediately after the meeting, which took place the day after Mr. Flynn resigned, according to two people who read the memo. The memo was part of a paper trail Mr. Comey created documenting what he perceived as the president's improper efforts to influence an ongoing investigation. An F.B.I. agent's contemporaneous notes are widely held up in court as credible evidence of conversations.  

There was more to follow, chair of the House Oversight Committee Jason Chaffetz, (Utah Republican) has requested the Comey memo from the FBI - and broader information (all memoranda, notes, summaries, recordings relating to communications between Comey & Trump). He wants this by May 24th.

What followed still further was much confirmation from one side, and denial from the other. Whichever side of the fence you'd like (or perhaps you're a trader with leg wherever its profitable ;-) ) the market perceived this as yet more doubt that tax cuts, fiscal stimulus and such can be enacted.

The result:

  • S&P500 mini futures trading in the 'overnight' on Globex: dropped around 0.5%
  • MSCI's broadest index of Asia-Pacific shares outside Japan: also dropped around Nikkei down 0.4% (lower now)
  • On currencies the USD was broadly weaker, down against the yen, EUR, CHF, GBP
  • Gold surged to above $1,244/ounce
GOLD

USD/JPY is sitting near its session low as I update, down 100+ points from its high in early US trade on Tuesday. EUR/USD ticked higher during the session, above 1.1100, then above 1.1115 and its near a session high as I post. Political risk seems to have shifted away from Europe since Macron's win in France (though I suspect we may be not quite concerned enough on Italy, but maybe that's yet to come) and more to the US.

EUR/USD

USD/CHF has traded small but steadily lower, GBP/USD is higher. NZD/USD also up a little.

AUD and CAD are two stinkers, though. USD/CAD gained. Oil dropped on the inventory data in late US time (official inventory data will follow on Wednesday morning), given the CAD an excuse to lose some ground. It has recovered somewhat, from USD/CAD above 1.3615 at one stage its back now under 1.3600.

AUD/USD ... its lower on the session around 0.7420. Wage data (for Q1) today shows wage growth trickling along at a record low level, which hasn'lt helped.

  • y/y wage growth is at 1.8%
  • CPI is at 2.1% pa
  • Thus real wage growth is negative
  • This is not a positive for growth in consumer spending, especially when considered against record levels of household debt and the paying down of debt

Monthly consumer confidence data affirmed the weaker readings on the weekly consumer sentiment, dropping again for May. News also from S&P that while they've reaffirmed Australia's AAA rating the've also left the outlook at negative.

The People's Bank of China set USD/CNY reference rate at its weakest since mid-February (stronger yuan).

Regional equities:

  • Nikkei -0.65%
  • Shanghai -0.10%
  • HK -0.24%
  • ASX -0.97%

Still to come:

Due at 0430GMT from Japan, March final Industrial production

  • the preliminary was -2.1 % m/m, prior (February) was 3.2%
  • & +3.3 % y/y, prior 4.7%