Dollar Hit on News that China May Stop Buying US Bonds
We saw some more volatility in the FX markets yesterday as news that China may slow down or stop it’s buying of US Treasuries, this news hit the UsdJpy particularly hard, with the pair taking another step to the downside having already been under pressure following Tuesday’s BOJ announcement that they were pairing back their JGB buying. We saw depreciation of the dollar against most of the majors on the back of this story although with the exception of the Jpy and the Cad the others have dropped back into the range.
The UsdCad managed to shake off any affect from the China news as concerns that the US may pull out of the NAFTA led to a drop in expectations of a hike at next weeks Bank of Canada meeting(now at 64%) and some significant pressure on the Cad. This saw the pair gain nearly a big figure on the day as it jumped from 1.2480 to 1.2580.
Looking ahead to today’s sessions and traders will be keeping a close eye on the news wires on anything new coming out of China with regard to yesterdays US bonds story. Focus will shift to Australia early in the day as the monthly Retail Sales figures are due (exp 0.4%). Into the London session and once again it’s relatively quiet on the fundamental data front although Euro traders will be looking closely at the ECB Monetary Policy Meeting Accounts out at 11.30 pm. The main event of the day will probably the US PPI data which is due out early in the New York session with market expectation sitting at 0.2%.
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