Dollar continues lower, stocks open weaker
The dollar is broadly lower, continuing a downtrend that began mid-month and accelerated after last Friday’s dovish speech by Fed Chair Powell. US stocks opened lower following European stocks which were hit hard by unexpected “tapering” comments by a governing member of the European Central Bank. US Treasury 10Yr yields are steady around 1.29%. Oil and gold prices are effectively unchanged near $68.70 per barrel and $1,813 per oz, respectively. Traders look forward to Friday’s US jobs data.
“Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence.”
August 31, 2021
EUR/USD 1.1827 GBP/USD 1.3789 USD/CAD 1.2610 AUD/USD 0.7317 USD/JPY 109.75 USD/CNH 6.4595 USD/ILS 3.2080 USD/MXN 20.1155 USD/CHF 0.9122 USD/INR 73.0063 USD/BRL 5.1457 USD/SGD 1.3436 USD/DKK 6.2887 USD/SEK 8.6070 USD/NOK 8.6829
The dollar is lower across the board, continuing the recent downtrend which accelerated after Fed Chair Powell’s dovish comments on tapering and rate hikes last Friday at the Jackson Hole symposium. Traders are now focused on this Friday’s US jobs data, which may help determine the timing of Fed tapering.GBP
Following yesterday’s summer bank holiday in the UK, the GBP has changed little versus the USD compared to its peer currencies. UK equities are slightly lower following today’s unexpectedly weak, albeit minor, economic data releases – New Consumer Credit and Mortgage Approval for July.EUR
The euro is higher on the day, trading over $1.18 and reaching its highest level since mid-August. ECB bond yields also rose following hawkish comments on tapering by a governing member of the ECB. Robert Holzmann said the ECB should begin a conversation about how/when it will taper its emergency bond purchase program. This morning’s release of Eurozone CPI surprised on the upside – Core CPI YoY of +1.6% was slightly above 1.5% consensus, and well above July’s +0.7%; CPI MoM of +0.4% was higher than 0.2% consensus and July’s -0.1.CAD
The CAD weakened following unexpected news that Canada’s economy contracted in Q2. Quarterly GDP annualized came in at -1.1%, much worse than consensus of +2.5% and Q1’s +5.6%. Analysts predict increasingly difficult times ahead as Delta variant cases soar. Traders look forward to the Bank of Canada meeting next week, when tapering of asset purchases may be discussed.ASIA/PACIFIC
The risk-on mood in financial markets fueled a surge in the AUD and NZD overnight, both outperformed most of their peer currencies. Traders look forward to Australia’s GDP Q2, trade balance and PMI data all to be released this week.
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