Forex news from the European trading session - 23 August 2021
Headlines:
- Bundesbank says virus resurgence may put unexpected strain on the economy in autumn
- UK August flash services PMI 55.5 vs 59.0 expected
- SNB total sight deposits w.e. 20 August CHF 715.0 bn vs CHF 714.6 bn prior
- Eurozone August flash services PMI 59.7 vs 59.8 expected
- Germany August flash manufacturing PMI 62.7 vs 65.0 expected
- France August flash services PMI 56.4 vs 57.0 expected
- Germany total active COVID-19 cases rises to highest since early June, RKI warns fourth wave has begun
- Jackson Hole in focus as the new week gets underway
- NZ PM Ardern says nationwide lockdown extended until midnight on Friday
Markets:
- CAD leads, JPY lags on the day
- European equities higher; S&P 500 futures up 0.4%
- US 10-year yields up 1.7 bps to 1.277%
- Gold up 0.6% to $1,791.87
- WTI up 3.1% to $64.05
- Bitcoin up 3.4% to $50,340
It's all about the Jackson Hole focus as we get the new week underway, as market participants take to the summit going virtual as a signal that the Fed will not introduce any new language on taper expectations this week.
That is helping to provide some comfort to risk trades, which suffered quite a bit last week amid delta variant concerns. Equities are higher and we're seeing some unwinding in safety bets in bonds, as Treasury yields tick a little higher on the session.
In turn, that is pressuring the dollar and yen lower with commodity currencies leading the charge in the major currencies space.
USD/CAD is down 100 pips in a fall to 1.2715 from around 1.2770 at the tail-end of Asia Pacific trading, with the loonie helped by higher oil prices as the commodity also capitalised on a weaker dollar to be up 3% to $64.
In particular, CAD/JPY has risen from the dead as price is up over 1% today after Friday's dramatic turnaround to prevent a head-and-shoulders breakdown.
Both AUD/USD and NZD/USD are also posting solid gains of 0.7%, trading near the highs at 0.7185 and 0.6870 respectively ahead of North American trading.
Meanwhile, EUR/USD is back up above 1.1700 around 1.1710-20 levels on the session while GBP/USD kept steady around 1.3660-70 levels despite poor UK PMI data.
Elsewhere, gold is closing back in on $1,800 on a weaker dollar while Bitcoin finds itself in a good spot, holding above $50,000 since early trading today.
