ForexLive European FX news wrap: Risk slides, commodity currencies slammed
Forex news from the European trading session - 19 July 2021
- BOE's Haskel: Tight policy isn't the right policy for now
- Treasury yields come under pressure in European trading
- Eurozone May construction output +0.9% vs -2.2% m/m prior
- Oil slides further by nearly 3% to below $70
- SNB total sight deposits w.e. 16 July CHF 711.9 bn vs CHF 711.7 bn prior
- Oil prices still likely to climb further - Citi
- JPY leads, CAD lags on the day
- European equities lower; S&P 500 futures down 1.1%
- US 10-year yields down 7 bps to 1.228%
- Gold down 0.6% to $1,800.31
- WTI down 3.7% to $69.17
- Bitcoin down 1.8% to $31,272
There is only one theme in the market to start the new week and it is that of risk aversion as equities sank while Treasuries were bid heavily, more so especially when European traders came into the fray on the day.
US futures tumbled, with S&P 500 futures extending losses from 0.4% to 1.1% on the session, with European indices down by 2-3% at the moment.
That kept the dollar and yen bid across the board with the latter squeezing out gains as USD/JPY fell from 110.00 to 110.65.
Commodity currencies were hit the hardest, with the loonie slammed lower as oil prices also declined on the softer risk sentiment and after OPEC+ formalised a deal.
USD/CAD jumped up from 1.2640 to 1.2800 during the session while AUD/USD fell from 0.7375 to 0.7340 and NZD/USD from 0.6970 to 0.6935 currently.
The other key development is in the bond market as Treasuries were bid strongly as 10-year yields fell from 1.28% to just below 1.23% now going into US trading.
It is tough to pinpoint any key factors driving the move but I would argue that a bout of exhaustion amid the recent run higher in the past few weeks for equities (no other fresh catalyst for a move higher), coupled with uncertainty from the bond market moves, are perhaps some of the reasons adding to "renewed virus concerns".