ForexLive Americas FX news wrap: Bond market takes charge
Forex news for New York trade on January 12, 2021:
- US November JOLTS job openings 6527K vs 6400K expected
- US treasury auctions off 10 year notes at 1.164% vs 1.172% WI
- Fed's Rosengren: Does not expect US to breach 2% sustained inflation over next two years
- Kansas City Fed George: Generally optimistic for continued economic recovery
- Fed's George: If inflation tips over 2%, Fed won't react to that
- Fed's Mester: Mon pol will not need to change so long as medium-term outlook remains intact
- Mester: Fed will make sure to communicate in advance its intentions for asset
- Fed's Bullard: Outlook for 2021 seems very strong
- Fed's Bostic: We may see a rebalance in prices that's stronger than expected
- UK records 45,533 covid cases vs 46,169 a day ago
- Gold up $12 to $1855
- US 10-yar yields down 1.7 bps to 1.13%
- WTI crude oil up 91-cents to $53.16
- S&P 500 up 4 points to 3803
- GBP leads, USD lags
Aside from the rally in cable it was a slower start to the day in the FX market. A continued rise in yields spread to Europe where Italian bonds made a particularly large move.
A soft 10-year Treasury sale flipped the script and as 10s fell to 1.13% from 1.187% the US dollar slumped. It was a case of steady selling in the dollar as USD/JPY slid to 103.73 from 104.25.
It was a similar move across the board with AUD/USD up 50 pips in a straight-line move and EUR/USD up to 1.2206 from 1.2155 at the London close.
You could argue that the dollar needs constantly-rising Treasury yields to sustain a bid. Or you could argue that the dollar was due for a retracement after a six-day rally.
The Fed continues to crack open the dollar to more-hawkish policy. It was a heavy day of Fedspeak with several members cracking open the dollar to some form of tightening albeit with vague timelines. The talk of more QE or a WAM extension is dead.
In the day ahead we'll hear from Brainard and Clarida and then Powell on Thursday so that theme isn't going anywhere.
At the same time, Biden's economic stimulus plan on Thursday is the main event of the week.