Forex news from the European trading session - 6 October 2021
Headlines:
- US MBA mortgage applications w.e. 1 October -6.9% vs -1.1% prior
- UK gas prices surge by 40% to record highs as the energy crisis worsens
- UK September construction PMI 52.6 vs 55.2 prior
- EU defends that energy price surge has little to do with climate policies
- Inflation fears grip markets to start the session
- Germany August factory orders -7.7% vs -2.1% m/m expected
- 10-year Treasury yields push to highest since mid-June
Markets:
- JPY leads, NZD lags on the day
- European equities lower; S&P 500 futures down 1.2%
- US 10-year yields up 1.7 bps to 1.548%
- Gold down 0.3% to $1,754.70
- WTI down 0.5% to $78.54
- Bitcoin down 0.4% to $51,260
The market was gripped by inflation fears in European morning trade as bond yields pushed higher amid a surge in gas prices in Europe, as the energy crisis deepened.
UK gas prices shot up by 40% at one point before paring that advance all the way back up to around 4% now but still, it isn't soothing fears on the session.
The jump in yields weighed on equities and turned a softer start to a rather heavy selloff now as we look towards North American trading. European indices are down by nearly 2% while US futures are down over 1% as risk aversion reverberated across the market.
That kept the dollar firmer throughout with EUR/USD falling from 1.1590 to fresh lows for the year at 1.1530 and GBP/USD down from 1.3600 to 1.3545.
USD/JPY held a slight advance early on amid higher yields in a push to 111.78 but is now dragged down to 111.42 as the negative sentiment in equities takes over.
Commodity currencies are the laggards with AUD/USD pushed lower from 0.7270 to 0.7230 with sellers seizing back near-term control and NZD/USD down over 1% in a drop from 0.6930 to 0.6880 during the course of the session.
USD/CAD also shot up from 1.2600 to 1.2640 as WTI crude is marked slightly lower after an early advance to above $79 before slipping back closer to $78.50.
The ADP employment report will be the next key risk event to watch but keep an eye on the energy crisis developments and inflation expectations as the market is tuning into that frequency rather closely so far on the day.
