August 17, 2018 – Market review and metrics for Forex, Oil, T-Note, Bund and S&P500
Last trading day of the week ends on a risk-on mode as commodity based currencies (CAD, NZD, AUD) were higher while USD was the weakest performer.
FX Strength
Canadian July CPI posted the largest m/m reading since 2011 which promptly saw the Loonie surge across the board. The “core” numbers though met market estimates which would seem to suggest that volatility in energy prices might have contributed to the surprise. That said, market odds for a rate hike jumped from the low 20% to the low 30% area. Clearly the market would like a few more data points to see if this was an outlier or a nascent sign of an uptick in inflation. If it is the latter then upcoming BOC’s monetary policy decision(s) would become more of an event as they juggle the need to manage inflationary forces with concerns about NAFTA negotiations.
Market Metrics
US equity markets ended the day higher apparently choosing to focus on the resumption of US-China trade talks and ignoring, for the time being, the simmering issues in Turkey that are evoking memories of past emerging market crises. A quick use of the “google machine” would reveal that these local flash points have invariably had an effect on a global scale and it has not been pleasant. (maybe this time it’s different !?)
FX Diem 