ForexLive America FX news wrap: Dollar mixes it up on stock/global economy fears

Author: Greg Michalowski

Forex news for US trading on August 21, 2015

• Canada July CPI 1.3% y/y vs 1.3% y/y expected
• Canada retail sales +0.6% vs. expectations +0.2
• Refineries could put fresh pressure on oil 
• S&P 500 futures point to more pain
• US equities opening up weak
• August US Markit manufacturing PMI 52.9 vs 53.8 expected
• Eurozone August prelim consumer confidence -6.8 vs -6.9 expected
• Why the euro strengthens on risk aversion
• Bonds and stocks sending competing signals
• The two sides of Paul Krugman
• Technical analysis: S&P gunning toward 2000 (well through it now)
• Nomura raises EUR/USD forecast
• Forex technical analysis: EURUSD testing 200 day MA door
• No surprise: Lacker will be hawkish in Sept speech next week
• Bullard: Fed doesn't react directly to equity markets
• Baker Hughes US oil rig count 674 vs 672 prior
• This is probably the stupidest argument I've heard today
• Nasdaq goes negative on the year
• CFTC commitments of traders: EURUSD short position trimmed
• S&P ends the day down 3.18% 

Stocks continued their liquidation on global growth concerns today with the S&P ending down -3.18% for the day, The Nasdaq index fell -3.52%. The Dow industrial average which has now fallen more than -10% on the year, was down -3.12%. 

Globally, the week was not good for any equity market with the FTSE down -5.54%, the Euro Stoxx index down -6.98%, the Dax down -7.83%, the Nikkei down -5.28% and the Shanghai composite shedding a whopping -11.54%. 

In currencies this week, the dollar index fell by 1.68% with the dollar falling 2.48% vs the EUR and 2.92% vs the CHF leading the way. 

For the day, the EURUSD was the big gainer (+1.27%) and is ending the day and week at the highs.  The trade continued to follow the stock market with the EURUSD benefitting on any stock weakness (see Adam's post on risk aversion). Technically, the bulls rode favorable technical breaks. The EURUSD moved above and closed above the 200 day MA for the first times since June 2014.

The USDJPY was also a big loser on the day (down 134 pips on the day). The Markit US manufacturing index did come out weaker for August at 52.9 vs. 53.8 expectations (was 53.8 last). This and declining stock prices gave traders a reason to sell dollars.  Technically, it too fell below a key technical MA (100 day MA at 122.27). This will now be resistance in trading next week.

The GBPUSD was little changed (+5 pips).  A steady bid in the EURGBP kept a lid on the pair.

The USDCHF benefitted from safe haven flows into the CHF. The pair ended up down 2.98% for the week and 1.27% on the day.  Like the EURUSD and the USDJPY which broke longer term MA, the USDCHF fell and closed below the 200 day MA (at 0.9636) and the 100 day MA (at 0.9484).

In the commodity currencies, the USDCAD shock off better than expected retail sales (+0.6%) and instead focused on the weaker oil prices. Crude oil for September delivery fell below the $40 per barrel level (low $39.86) but did bounce into the close ($40.23).  Nevertheless, it was still lower by -1.10 on the day and that helped to support the USDCAD. The AUDUSD traded higher and lower on the day, but ended at NY session lows.  The NZDUSD was more supportive, as AUDNZD declines kept it more supportive.