In a volatile day for currency markets, the USD made headway against the euro, yen, GBP, Aussie dollar and Loonie. Helped by more positive economic data, the dollar rebounded during the day after losing ground against the euro and yen in early trading. The dollar halted its assault at $110 vs. the Canadian dollar and posted significant gains aga8inst the Australian dollar.
Factory output and employment gained momentum according to data from the Mid-West Atlantic region and the Philadelphia Federal Reserve Bank. The data suggests stronger than expected employment in the sector in the two regions which include states of Ohio, Pennsylvania, New Jersey and others. The Philadelphia Fed said its business activity index climbed 9.4 points this month from 6.4 percent in December. This marks a significant gain that would help to counter last month’s disappointing non-farm payroll report.
Bolstering the manufacturing data was a report from the US Labor Department showing that state unemployment benefits dipped by about 2,000 claims to a seasonally adjusted rate of 326,000. The combination of these reports will test the accuracy of the Labor Department’s December payroll report.
The data struggled against early morning returns from Goldman Sachs, Citigroup, two companies that were burned by bond trades in the fourth quarter. Goldman stock was a big loser on the day, falling 21 percent at one point. Citigroup shares turned down 4.1 percent and the S&P financial sector index lost 0.7 percent. The news caught investors by surprise in the wake of positive gains posted by JP Morgan Chase, Wells Fargo and Bank of American on Wednesday.
The DOWD was off 76.53 by mid-afternoon. The S&P 500 lost 4.2 po0its to 1,844.18 as the NASDAQ posted slight gains.
Helping the dollar was continues encouraging data regarding inflation. The December Consumer Price Index rose just 0.3 percent after being flat in November.
Bank of England Currency Rate Scandal
In information released through freedom of information releases, Reuters reported that The Bank of England discussed their processes for setting foreign exchange rates one ear before the manipulation occurred.
Minutes from the April 23, 2012, meeting of the subgroup of the London Foreign Exchange Joint Standing Committee revealed discussions around fixes, the daily setting of benchmark exchange rates. At the meeting, revelations about online chatrooms that discussing advance notice of the daily settings was revealed. The subgroup met at the London offices of BNP Paribas.
The Financial Conduct Authority, the regulatory wing of the Britain, reported that the BoE only became aware of the irregularities months after the April, 2012, meeting. It was action by the US Department of Justice that forced the investigation into the $5.3 trillion-a-day market in October 2013. Large penalties, fines and legal action are expected.
