Forex news for New York trade on August 24, 2021:
- Gold down $1 to $1803
- WTI crude oil up $2.03 to $67.68
- US 10-year yields up 3.8 bps to 1.295%
- S&P 500 up 7 points to 4486
- NZD leads, CHF lags
There wasn’t much in the news to highlight any new catalyst for the run higher in reopening and risk trades. Instead, it was a carry over from the prior two days of trading that saw signs of a top in US cases and China arresting the outbreak. If anything, Democrats coming together (reportedly, we’re still awaiting the vote) to move forward on infrastructure is something to add more stimulus and you could see that in resulting higher bond yields. I’d warn though that it’s still going to be a long road.
In general, FX trading was less enthusiastic than earlier in the day. There were two flushes in the US dollar. The first was localised to USD/JPY and EUR/USD as the dollar slumped at the start of New York trade.
The second was into the London fix as cable and the commodity currencies got a bump. Both of the moves largely faded in the following 90 minutes so we’re finishing away from the extremes of the day.
Looking ahead, there’s some reflexivity in the market so worries are growing that Powell is seeing the same improved tone and that could put tapering back on the table Friday. I’d imagine his speech has gone to vetting and editing at this point though and he’s not going to sway back and forth based on a few days of stock trading. In any case, it’s something to keep in mind as we count down to the FOMC.