Forex news for Asia trading Monday 24 December 2018
US politics again provided a shove for financial markets. Over the weekend US Treasury Secretary Mnuchin relayed that US President Trump never suggested firing Federal Reserve Chair Powell. White House budget director Mick Mulvaney (who will be the new chief of staff) followed up by saying President Trump does not believe he has the authority to fire Powell. Oh, the US government shut down too.
USD/JPY was marked lower first thing Monday here in Asia (ie ‘flight to safety’ yen higher) on a ‘where there’s smoke there’s fire’ basis.
As NZ and Australian forex markets opened (on a holiday-thinned week) the Gong Show continued. US Treasury Secretary Mnuchin tweeted that he had called the CEOs of six major banks and was told they had ample liquidity for loans and market operations. Trader responses to this included ‘Huh? Does this mean there might be a problem?’ (no one had actually expressed any concern about bank liquidity) to ‘Ah, so the rumours a fund (or funds) blew up last week are true?’. Mnuchin seemed to be answering a question no one had asked. via GIPHY
The Treasury Secretary went further, saying he had convened a meeting of the President’s Working Group on Financial Markets for Monday. In case you are wondering, this group is affectionately known as the Plunge Protection Team and are active in times of market turmoil.
As the morning progressed initial USD/JPY moves were retraced, from lows under 110.90 back towards its late Friday level circa 111.20.
Other currencies managed to move higher on the session against the USD also. Cable was notable for stacking on 60 or so points from its late Friday level, while EUR, AUD, NZD, CAD are all higher too against the dollar. Gold is up around 8 USD.
As the session progressed reaction to the weekend news and Mnuchin’s tweets faded away, and the where there is smoke there is fire seemed to morph into a storm in a teacup. China removed some tariffs, and holiday lethargy may both well have played a part also.
To all, have a very merry Christmas!