Markets mixed as traders focus on Delta variant and upcoming inflation data

Global equities are mixed and the dollar is slightly lower today, as traders focus attention on the potential economic impact from the spreading Delta variant and on this week’s upcoming US inflation data. Last Friday’s strong US payroll data led to increased expectations of higher US rates, which triggered a sell-off in oil and gold prices, but did not prevent US Treasury 10-Year yields from falling to 1.27%. Traders are beginning to shift attention to the Kansas Fed’s Economic Policy Symposium in Jackson Hole on August 26-28 when Fed Chair Powell will speak.

This week's economic data:

Monday: US Jobs Openings and Labor Turnover Survey (JOLTS) (June); Eurozone CPI, Industrial Production and Unemployment

Tuesday: US Unit Labor Costs (Q2); Nonfarm Productivity (Q2)

Wednesday: US CPI (July); Real Ave Weekly Earnings

Thursday: US PPI (July); Initial Jobless Claims; UK GDP (Q2), Industrial Production (June)

Friday: US Import Prices (July)

FX Rates
August 9, 2021

Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.

EUR/USD 1.1763
GBP/USD 1.3871
USD/CAD 1.2547
AUD/USD 0.7361
USD/JPY 110.03
USD/CNH 6.4811
USD/ILS 3.2152
USD/MXN 20.0396
USD/CHF 0.9168
USD/INR 74.26
USD/BRL 5.2358
USD/SGD 1.3557
USD/DKK 6.3231
USD/SEK 8.6846
USD/NOK 8.1934
USD
A strong US job’s report reading on Friday led to increased concern that the Fed will begin to taper its asset purchases sooner than later this year. Inflation data will be released later in the week – CPI on Wednesday, PPI on Thursday, and Import Prices on Friday. Current expectations of high figures will have traders trying to determine if such data will change the Fed’s current inflation “transitory” story.
GBP
The UK pound is slightly higher on the back of last week’s hawkish turn by the Bank of England. Traders have increased the odds of a rate hike in February to 60%. Traders look forward to a slew of economic data on Thursday – Construction Output, GDP, Government spending, and Industrial Production, Exports/Imports.
EUR
The euro held steady today, as traders digest a slew of economic data releases for the eurozone. Aside from lower Industrial Production, most economic data – current account/trade balance, unemployment – improved over the previous period.
CAD
The Canadian dollar outperformed most G-10 currencies despite lower oil prices. The only data released today was the Bloomberg Nanos Confidence Survey, which was slightly higher than the prior period.
ASIA/PACIFIC
The Chinese yuan moved little since Friday. There were no economic releases today, but Retail Sales and Industrial Production next week will be closely watched.

The Japanese yen outperformed, but the USD/JPY remains above the key 110 level.

For more analysis on FX markets or information regarding SVB's FX services:

Contact your respective SVB FX Advisor or the SVB FX Advisory Team at fxadvisors@svb.com.
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory

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Source: Bloomberg

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WRITTEN BY

Scott Petruska

Markets mixed as traders focus on Delta variant and upcoming inflation data