Dollar Dumped, Gold Breaks Out
A wave of economic data initially boosted the dollar but pain the bond and stock markets led to a complete turnaround in volatile trading. The Swiss franc was the best performer while the US dollar lagged. After all the excitement, markets will have a chance to digest the moves in Asia because there is no economic data on the calendar.
Thursday's trading was enough to leave the most level-headed analyst a bit confused. A number of cross-currents hit the market:
- US CPI numbers were close to expected but hit the Fed's target of 2.0%
- Initial jobless claims fell to the lowest since 2007
- Several US manufacturing numbers were worse than expected
- Executives at Wal-Mart and Cisco warned about the economy
- Chinese Treasury holdings fell $20B in May
Those headlines have differing meanings for different markets and for the Fed. The stock market focused on the negativity from corporates and dropped to a one-month low. The employment, CPI numbers and Chinese flow data spooked the bond market, pushing yields to 2-year highs, breaking 2.75% resistance in 10-year yields.
The FX market was caught in the middle. Risk-off trading and tapering boosted the dollar initially but EUR/USD couldn't fall below 1.3200 and cable remained relentlessly bid. Eventually, declines in stocks weighed on USD/JPY and boosted demand for gold.
As USD/JPY fell to the lows of the day and gold broke key resistance at $1350, a wave of dollar selling hit. Even the commodity currencies made big gains against the dollar and a short-squeeze was likely part of the story.
We will watch how this develops but the breakouts in stocks, bonds and gold can't be ignored and point to interesting days ahead.
US Stimulus Faces Dems Barriers
by Adam Button | Oct 21, 2021 14:30
أهم الحقائق المتعلقة بتقليص مشتريات السندات
by Ashraf Laidi | Oct 20, 2021 11:57
Housing Highlights non-Transitory Inflation
by Adam Button | Oct 19, 2021 18:54
US Consumer Resilience & NZ Inflation Surge
by Adam Button | Oct 18, 2021 13:26
8 Bitcoin ETFs Awaiting SEC Approval
by Ashraf Laidi | Oct 18, 2021 10:21