Weak data? No problem! The Greenback continued to rake in safe-haven gains and got an extra boost from mostly hawkish comments by Fed official Evans.
Meanwhile, the Kiwi continued to tumble across the board as U.S. session traders caught up to the dovish remarks during the RBNZ presser and from Chief Economist McDermott.
- U.S. headline PPI flat in July vs. projected 0.2% gain, previous 0.3% increase
- U.S. core PPI up 0.1% in July vs. estimated 0.2% increase
- Canadian housing starts down from 246K to 206K vs. 220K forecast
- U.S. initial jobless claims slowed from 219K to 213K vs. 220K forecast
- U.S. final wholesale inventories up 0.1% vs. expected flat reading
- Business NZ manufacturing index down from 52.7 to 51.2
Hawkish remarks from Evans
Chicago Fed President Charles Evans acknowledged in an interview that the U.S. economy is doing “very well” and that one or two more rate hikes are in the cards this year.
Now Evans isn’t exactly a voting member of the FOMC nor is he part of the Avengers (Oh wait, I must have him confused with my buddy, Chris!) but his latest comments are a huge deal because he used to be one of the more dovish dudes. Heck, he even voted against hiking in December last year!
This time is different, however, as Evans noted that the “extremely strong” performance of the economy made him feel more confident that inflation could move closer to the Fed’s 2% target. He even added that there’s “good reason to expect we will stay in that area.”
Evans did admit that trade-related issues do bring uncertainty to the mix, particularly for businesses, but he seemed upbeat overall in saying:
“Labor markets are good. Household balance sheets seem like they are fine. Businesses are optimistic … The global economic environment seems to be really quite good.”
Evans also mentioned that trade troubles could be offset by other fiscal measures introduced by the Trump administration, including deregulation and tax reform.
Some risk-off action
Wall Street ended on a mixed note as resurfacing trade troubles dampened the mood despite a handful of strong earnings figures.
- Dow 30 index is down 74.52 points to 25,509.23 (-0.29%)
- Nasdaq is up 3.46 points to 7,891.78 (+0.04%)
- S&P 500 index is down 4.12 points to 2,853.58 (-0.14%)
Gold also returned some of its wins while crude oil dipped a little more despite news that China has removed U.S. oil from its list of targeted products.
- Gold fell to $1,212.26 per troy ounce (-0.16%)
- WTI crude oil tumbled to $66.70 per barrel (-0.36%)
Major Market Mover(s):
The dollar left its peers eating dust as it banked on Fed official Evans’ shift to a more hawkish stance, on top of sustained safe-haven demand.
USD/JPY is up from a session low of 110.85 to a high of 111.17; USD/CHF advanced to .9936; EUR/USD tumbled to 1.1525; GBP/USD sank to 1.2830, and AUD/USD back below the .7400 handle.
The Kiwi just couldn’t catch a break from its slide throughout the day as it chalked up a bit more red during the U.S. hours.
NZD/USD sank further from .6652 to .6612; NZD/JPY slid to 73.47; NZD/CHF tumbled from .6604 to .6564; EUR/NZD continued to rise to 1.7450, and GBP/NZD is up to 1.9425.
Watch Out For:
- 11:50 pm GMT: Japanese Q2 GDP (0.3% rebound from earlier 0.2% contraction expected)
- 11:50 pm GMT: Japanese PPI y/y (gain from 2.8% to 2.9% expected)
- 1:30 am GMT: RBA monetary policy statement (Review their policy decision here)
- 4:30 am GMT: Japanese tertiary industry activity index (0.2% dip expected)