Currency valuations were the story this morning, and yes, you can blame the central bankers, with some help from the media. First up, the Japanese Yen rallied hard when BBC Radio aired an old interview with BOJ Gov. Hiruhiko Kuroda. In that interview, the Governor ruled out “helicopter money”, or perpetual bonds. With the Bank of Japan widely expected to act aggressively next week, markets reacted at the time. The Yen did soften somewhat after news broke that the interview was dated. After that ridiculousness, the ECB held off on acting further, which was expected. At first the Euro spiked higher, most uncharacteristic behavior for that unit of currency while the ECB president is speaking. Draghi did eventually go into the preparedness of the central bank to act if post-Brexit conditions worsen, and the ECB’s ability to keep finding something, anything to buy. That sent the Euro back to it’s recent support level of 1.10 versus the US dollar.
The secondary story of the day would be the domestic macro that we saw this morning. The two items that most notably stand out are June Existing Home Sales, and the July Philly Fed. First, the Philly Fed… a -2.9 print that actually seemed a bit misleading, once one took a look under the hood. With New Orders, Shipments, and Unfilled Orders all moving the right way, this was hardly a discouraging report. Existing Home Sales then beat to the upside, close to the top of the range. This added to what was already a fairly strong month of June for the US economy. June was a month where we saw a strong NFP print followed by hot Retail Sales, improved Industrial Production, and some strength in Housing Starts, not to mention y/y Core Consumer level inflation of 2.3%.